Pass the ACFE Certified Fraud Examiner CFE-Investigation Questions and answers with ExamsMirror

TheFraud Examiners Manualstates:

“Interviewers are encouraged to formulate their questions in a way that will not bring about a strong emotional reaction… emotive words of all types should be avoided during the introductory phase. Such words put people on the defensive”.

Thus, statement C isNOT true.

TheFraud Examiners Manualstresses that fraud examiners mustnever promise unconditional confidentiality, because findings often must be disclosed to management, auditors, or authorities. They can only offer “qualified confidentiality” (best efforts to protect identity, but with necessary limits). Therefore, optionAis the most appropriate response.

Complex questions:

“consist of a series of interrelated questions… too complicated to be easily understood, cover more than one subject, or require more than one answer”.

The question asked by Delta (“Were you aware that the signature was forged, and why didn’t you tell anyone earlier?”) covers two issues, making itcomplex.

TheFraud Examiners Manualnotes that EU privacy laws (e.g., EU Data Protection Directive, precursor to GDPR) restrict or prohibit the transfer of personal data to non-EU countries without compliance:

“Many foreign countries—and those in the European Union (EU) in particular—restrict or prohibit processing and transferring personal data… The EU’s directive… places limits on transmitting personal data to non-EU countries”.

Thus, since the fraud examiner is handling data about an EU-based employee, GDPR compliance is required, even if the examiner is outside the EU.

TheFraud Examiners Manualexplains that before obtaining or cleansing data, the first step in using data analysis is theplanning phase. This includesunderstanding the data, articulating objectives, and building a profile of potential frauds. Without this, examiners risk inefficient analysis and overlooking key fraud risks.

✅Answer: C. Build a profile of potential frauds

From the2014 International Fraud Examiners Manual, under the section related to tracing financial transactions, specifically tracing the disposition of loan proceeds, the following objectives of tracing activities are explicitly outlined:

“Tracing the disposition of loan proceeds can help fraud examiners:

Determine whether loan proceeds were deposited into hidden or unknown accounts

Determine whether loan proceeds were used to pay off other loans

Identify the involvement of previously unknown individuals (potential witnesses)

Determine whether payments were made from hidden accounts

Identify undisclosed related-party transactions”

There isno mentionthat tracing loan proceeds can uncoverprevious civil offensescommitted by the subject. Civil offenses refer to non-criminal violations (e.g., breach of contract, torts), which tracing offinancial transactions like loan proceedsis not directly designed to uncover.

This isnot a recognized purposeof tracing as taught in the CFE Investigation section. The core objectives revolve around uncovering hidden assets, hidden accounts, payments, and potential witnesses —not prior legal infractions.

Therefore, thecorrect answer is A, as it is the only option that isNOT trueaccording to official CFE investigation materials.

The manuals explain that in verbal confessions, subjects oftenunderestimatethe amounts to minimize guilt, not overestimate. The process involves moving from accusation to benchmark admission, handling lies tactfully, and obtaining details by chronology, transaction, or event. Thus, optionBis NOT true.

The recommended questioning order is:

“As a general rule, questioning should proceed from thegeneral to the specific; that is, it is best to seek general information before seeking details”.

This ensures the respondent provides a free narrative before narrowing down to specifics.

Explanation with Extracts= Predication requires sufficient circumstances to suggest fraud. TheCFE Prep Guideexplains:

“Fraud examiners should not investigate beyond the available predication… There is insufficient predication to confront Wallace or to make any direct allegations about fraud, but Carter does have adequate predication to make discreet inquiries”.Similarly, Arnold may discreetly inquire but not accuse or search property without further evidence.