CFE-Fraud-Prevention-and-Deterrence Exam Questions & Answers
Certified Fraud Examiner - Fraud Prevention and Deterrence Exam • ACFE
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Po, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination. She did not find fraud, but in Po's opinion, there were several internal control deficiencies that, if not corrected, could facilitate the occurrence of fraud. Under the ACFE Code of Professional Ethics, which of the following is TRUE?
Which of the following statements is TRUE according to rational choice theory?
Rational choice theory posits that criminal behavior is a result of deliberate decision-making. According to the ACFE manual:
''Rational choice theory assumes that individuals weigh the expected benefits of committing a crime against the possible consequences. If the perceived benefits outweigh the perceived risks, the individual may choose to offend.''
During an external audit, the audit team identifies evidence that the company's financial statements were intentionally manipulated to conceal an asset misappropriation scheme. However, the amount of the resulting misstatement does not meet the quantitative materiality threshold for the audit. Which of the following statements is TRUE regarding this situation?
Auditors evaluate fraud-related misstatements using both quantitative and qualitative considerations. A misstatement below the numerical materiality threshold cannot automatically be dismissed when it results from intentional manipulation. Fraud involving management, concealment, override of controls, or intentional financial statement manipulation may be qualitatively material even if the dollar amount is small. Therefore, the auditors should consider who committed the manipulation and what it indicates about integrity, control environment, and possible broader misstatement risks. Asset misappropriation can be relevant to an external audit when it causes or is concealed through financial statement misstatement. The auditors do not automatically lower materiality for the entire audit merely because fraud exists, but they must respond appropriately to identified or suspected fraud. Therefore, option D is correct.
Beezie, a Certified Fraud Examiner (CFE), took an introductory class in computer forensics. When a client thought there might be evidence of a crime on their computer, Beezie decided to conduct a forensic examination of the computer even though she had no experience or advanced training in this are
a. Which of the following is TRUE regarding Beezie's conduct?
Sycamore, Inc. has a simple organizational structure with few specialized departments. The structure of Sycamore, Inc. increases the likelihood that fraud will go undetected within the organization.
The White-Collar Crime discussion on organizational structure explains that structural characteristics can affect how likely wrongdoing is to occur and remain undetected. In simple organizations with fewer specialized departments and less differentiation, there are generally fewer independent checks, fewer distinct perspectives, and less separation among functions. This can make it easier for misconduct to remain hidden because fewer people are positioned to identify irregularities or challenge suspicious activity. By contrast, greater specialization can sometimes make concealment more difficult because unusual conduct may be more visible to those with relevant expertise. The manual also repeatedly links effective controls and oversight to fraud detection. Consistent with that reasoning, a simple structure with few specialized departments can increase the likelihood that fraud will go undetected. Therefore, the statement is true.
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