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ACFE CFE-Fraud-Prevention Exam Syllabus Topics:

Section	Weight	Objectives
Fraud Prevention and Deterrence	25%	- Ethics and corporate governance - Internal control systems and evaluation - Whistleblowing and reporting mechanisms - Monitoring, auditing, and continuous improvement - Fraud risk assessment - Fraud deterrence strategies and controls - Fraud risk governance and organizational culture - Anti-fraud policies and procedures - Fraud prevention programs and frameworks

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ACFE Certified Fraud Examiner - Fraud Prevention and Deterrence Exam Sample Questions (Q188-Q193):

NEW QUESTION # 188
Which of the following statements is MOST ACCURATE regarding an effective system of anti- fraud controls?

A. It prioritizes implementing preventive controls over detective controls.
B. It focuses more on detective controls than preventive controls.
C. It decreases a potential fraudster's belief that misbehavior will be detected.
D. It reduces the risk of fraud but does not completely eliminate it.

Answer: D

Explanation:
The manual states that no system of internal controls can fully eliminate the risk of fraud. Even so, well-designed and effective internal controls can greatly reduce an organization's vulnerability to fraud by lowering opportunities and increasing the perception of detection. This means an anti- fraud control system is highly valuable, but it is not absolute. The manual does not say that preventive controls should always be prioritized over detective controls or vice versa; rather, both play important and complementary roles. It also specifically says effective controls increase, not decrease, the perception that misconduct will be detected, which is a key deterrent to potential fraudsters. Therefore, the most accurate statement is that an effective system of anti-fraud controls reduces risk but does not completely eliminate it.

NEW QUESTION # 189
A government auditor is conducting a financial statement audit of a public-sector entity in accordance with the International Standards of Supreme Audit Institutions (ISSAI). Which of the following is TRUE regarding the auditor's consideration of fraud during this engagement?

A. The requirements found in International Standard on Auditing (ISA) 240 do not apply to the engagement
B. The objectives of the audit are likely narrower than those of a private-sector financial statement audit.
C. In addition to fraud, the auditor should remain alert to potential occurrences of abuse during the audit.
D. The auditor has the automatic ability to withdraw from the audit engagement if fraud is found.

Answer: C

Explanation:
ISSAI Standards:
The International Standards of Supreme Audit Institutions (ISSAI) require government auditors to consider fraud and abuse during financial audits. Abuse includes improper use of authority or resources, which may not always meet the legal threshold of fraud but still warrants attention.
Expanded Audit Scope:
Unlike private-sector audits, public-sector audits often have broader objectives, requiring vigilance for misuse of public funds and resources.
Why A is Correct:
Staying alert to abuse ensures comprehensive accountability, aligning with ISSAI's objectives.

NEW QUESTION # 190
Which of the following is a TRUE statement regarding the role of a well-designed organizational structure as part of an anti-fraud program?

A. A confused organizational structure makes it harder for a fraudster to perpetrate and conceal their misdeeds.
B. Formally establishing and communicating the proper flow of information in an organization can hinder its fraud prevention initiatives.
C. Effectively documenting and communicating the organizational structure to all employees can help prevent fraud.
D. Displaying organizational and departmental hierarchies can help fraudsters select their targets.

Answer: C

Explanation:
A clearly defined organizational structure contributes to accountability and reduces fraud risks.
According to the ACFE manual:
"An effectively documented and communicated structure helps prevent fraud by providing clear lines of authority and responsibility and ensuring appropriate oversight."

NEW QUESTION # 191
Maria, a Certified Fraud Examiner (CFE), is conducting a fraud risk assessment for a company where her brother serves as the Chief Financial Officer. Maria believes she can remain impartial.
What should she do?

A. Continue the assessment but avoid reviewing financial controls
B. Disclose the relationship and remove herself from the engagement if independence could reasonably be questioned
C. Continue the assessment because no actual fraud has been identified
D. Continue the assessment if the board verbally approves

Answer: B

Explanation:
The ACFE emphasizes both actual objectivity and the appearance of objectivity. Even if Maria believes she can remain unbiased, a reasonable third party could question her independence due to the close family relationship. Proper disclosure and reassignment help preserve confidence in the integrity of the engagement.

NEW QUESTION # 192
To reinforce an anti-fraud culture, it is BEST for an organization's management to:

A. Discipline any employees who publicly express their frustration regarding organizational policies.
B. Discourage employees from questioning their immediate supervisor's actions or decisions if they have concerns.
C. Use a checklist of initiatives to ensure that all the elements of a strong corporate culture are in place.
D. Require senior leaders to follow the same ethics policies that are in place for all staff-level employees.

Answer: D

NEW QUESTION # 193
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