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ACFE CFE-Fraud-Prevention Exam Syllabus Topics:

Section	Weight	Objectives
Corporate Governance and Ethics	25%	- Ethical culture and tone at the top - Code of conduct and compliance programs
Internal Controls and Fraud Prevention	25%	- Internal control design and effectiveness - Fraud detection and prevention controls
Fraud Prevention Framework	25%	- Fraud risk assessment processes - Fraud risk governance and oversight
Fraud Risk Management and Deterrence	25%	- Fraud prevention strategies and programs - Monitoring and continuous improvement

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ACFE Certified Fraud Examiner - Fraud Prevention and Deterrence Exam Sample Questions (Q19-Q24):

NEW QUESTION # 19
According to the differential reinforcement theory, behavior is weakened when positive rewards are gained or punishment is avoided.

A. False
B. True

Answer: A

Explanation:
Differential Reinforcement Theory:
This theory suggests behavior is strengthened when positive rewards are gained or punishment is avoided, not weakened.
The premise is the opposite of what the statement claims.
Conclusion: The statement is incorrect because differential reinforcement strengthens, not weakens, behavior.

NEW QUESTION # 20
Which of the following Is one of the recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

A. Have adequate compensation committee resources and authority
B. Have a mandatory independent audit committee
C. Develop a written charter for management
D. Give shareholders oversight of hotline reporting programs

Answer: B

Explanation:
Treadway Commission Recommendations:
Establishing an independent audit committee is essential for oversight and reducing fraud risk in financial reporting.
Audit committees play a critical role in ensuring the integrity of financial statements.

NEW QUESTION # 21
Mary is charged with implementing a fraud reporting program on behalf of her organization.
Which of the following is a best practice that Mary should follow to ensure that the program is successful?

A. Mary should inform employees that the names of all individuals who report misconduct will be shared with the organization's governing body and law enforcement.
B. Mary should inform employees of the precise methods for reporting potential fraud, such as completing an online form.
C. Mary should inform employees that they will be held accountable for reporting tips that cannot be verified.
D. Mary should inform employees that they are required to report any information about potential fraud directly and only to their immediate supervisor.

Answer: B

Explanation:
For a fraud reporting program to be effective, employees must clearly understand how to use it.
Providing specific and user-friendly reporting methods, such as hotlines, email addresses, or online forms, increases accessibility and usage. Options A and D discourage reporting, while B limits it unnecessarily, especially in cases where supervisors may be involved.

NEW QUESTION # 22
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal control as:

A. A process aimed at proactively identifying, evaluating, and addressing an organization's vulnerabilities to fraud by both internal and external sources
B. A process involving personnel at all levels of the organization that aims to eliminate all uncertainty and risk while also ensuring the achievement of organizational goals
C. A process implemented to review how well the organization's risk management capabilities have increased value over time and how they will continue to drive value for the organization
D. A process, effected by an entity's board of directors, management, and other personnel,designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance

Answer: D

Explanation:
The COSO definition of internal control is:
"A process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance." This is the formal and widely accepted COSO definition.

NEW QUESTION # 23
A fraud risk assessment identifies a scheme that has a low likelihood of occurrence but would cause catastrophic financial and reputational damage. How should the organization treat this risk?

A. Evaluate both likelihood and impact when determining mitigation priorities
B. Remove it from the assessment
C. Focus only on frequent fraud risks
D. Ignore it because likelihood is low

Answer: A

Explanation:
Fraud risk assessments should consider both probability and potential impact. Some events occur rarely but can threaten the organization's financial stability, reputation, or regulatory standing. These risks often justify significant preventive and detective controls despite their low likelihood.

NEW QUESTION # 24
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