CFE-FRAUD-PREVENTION-AND-DETERRENCE Online Practice Questions and Answers

Which of the following statements about the fraud risk assessment process is MOST ACCURATE"?

A. To ensure the independence of the team members a fraud risk assessment must be conducted by a consultant or other external party.

B. The assessment team must be perceived as independent and objective by others for the assessment to be effective

C. If the individuals conducting the fraud risk assessment truly believe that fraud could not happen at the organization the assessment process should reflect that belief.

D. The fraud risk assessment is most effective when management s influence on the process is limited.

In a company with all of the following parties, who should have primary responsibility for the oversight of the organization s compliance program?

A. The board of directors

B. General counsel

C. Internal audit

D. The chief ethics officer

An effective system of internal controls:

A. Decreases the perception that fraud will be detected

B. Focuses more on detective controls than preventive controls

C. Focuses more on preventive controls than detective controls

D. Does not completely eliminate the risk of fraud

In identifying the inherent fraud risks that could apply to the organization the fraud risk assessment team should discuss

A. The possibility of management override of controls

B. Risks to the organization's reputation

C. The organization's incentive programs

D. All of the above

The International Organization of Securities Commissions' (IOSCO) Principles for Auditor Oversight states that auditor oversight should involve a regular review process designed to ascertain whether audit firms adhere to quality control policies and procedures.

A. True

B. False

Which of the following is FALSE regarding a background check policy for employees'7

A. Where permitted by law. management should run a background check on any existing employee who is being promoted to a position that includes access to sensitive or valuable company resources, even if a background check was run on the individual at the time of hire

B. When verifying past employment, management should only ask previous employers to verify the dates the candidate was employed.

C. As part of the screening process, management should contact the references provided by the job

candidate

D. At a minimum, management should conduct a background check on any candidate who will have constant access to cash, checks, and credit card numbers, or other easily stolen items.

Fraud risks related lo corruption include all of the following EXCEPT

A. Espionage by competitor

B. Aiding and abetting vendor fraud

C. Payment of bribes

D. Receipt of kickbacks

In response to an employee s failure to meet performance expectations. a manager demotes the employee to a junior-level position This is an example of what type of behavioral response?

A. Negative reinforcement

B. Punishment

C. Positive reinforcement

D. None of the above

The objective of anti-fraud controls is to:

A. Completely eliminate residual fraud risk

B. Reduce the residual fraud risk to a level that is significantly smaller than the inherent fraud risk

C. Reduce the inherent fraud risk to a level that is significantly smaller than the residual fraud risk.

D. Completely eliminate inherent fraud risk

Which of the following is FALSE regarding proactive fraud auditing procedures?

A. Implementing proactive fraud audit procedures demonstrates management's intention to aggressively seek out possible fraudulent conduct

B. Fraud audit procedures should be designed to incorporate an element of surprise.

C. Analytical review of the financial statements is best used to uncover small frauds that might be missed by other detection methods

D. Fraud assessment questioning techniques are most appropriately used as part of the normal audit process