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ACFE Certified Fraud Examiner - Fraud Prevention and Deterrence Sample Questions:

1. Article II of the ACFE Code of Professional Ethics prohibits illegal or unethical conduct, but It allows exceptions for unknowing violations of the law.

A) False
B) True

2. Which of the following is TRUE regarding corporate governance?

A) Corporate governance's primary purpose is to ensure the accuracy of the organization's financial reports
B) An entity's corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization
C) Fraud risk management is considered to be the foundation of effective corporate governance
D) Effective corporate governance practices are most necessary in an organization in which the owners are also the individuals responsible for setting the corporate strategy.

3. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), internal control is defined as:

A) 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.
B) The system that is designed and implemented to eliminate all uncertainty and risk while also ensuring the achievement of organizational goals.
C) A process aimed at proactively identifying, assessing, and managing an organization's vulnerabilities to fraud by both internal and external sources.
D) The system enacted to ensure effective oversight of the board of directors, management, and all other parties responsible for an organization's direction, operations, and performance.

4. During a fraud risk assessment, a manager argues that fraud risks should only be evaluated based on historical fraud incidents. What is the BEST response?

A) Evaluate both existing and potential fraud risks, including risks not previously observed
B) Focus exclusively on areas with prior losses
C) Agree because past fraud is the strongest predictor of future fraud
D) Exclude hypothetical fraud scenarios

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

Solutions: