CFE-Fraud-Prevention-and-Deterrence Exam Dumps - Certified Fraud Examiner - Fraud Prevention and Deterrence Exam

Regulatory and Legal Misconduct:

This category includes practices that violate laws or regulations, such as anti-competitive behavior, insider trading, and conflicts of interest.

Why A is Correct:

Fraudulent customer payments are typically categorized under operational or financial fraud, not regulatory and legal misconduct.

Why Other Options are Incorrect:

B, C, and D: These practices involve violations of regulations or legal obligations, directly aligning with regulatory and legal misconduct​​.

References for All Questions:

ACFE Fraud Examination Guide and related professional standards​​.

International and jurisdictional auditing standards for public-sector auditors​​.

COSO and governance frameworks on fraud risk management​​.

Impartiality in Fraud Risk Assessment:

As the lead on the fraud risk assessment, Glenda must maintain objectivity and avoid the appearance of bias.

Her history of disagreements with Bridgette creates a potential conflict of interest, which could compromise the assessment's credibility.

Why Option D is Correct:

Assigning the accounts receivable department's assessment to another individual eliminates the risk of perceived or actual bias.

Analysis of Other Options:

A. Confrontation: Not appropriate during a professional assessment.

B. Including disagreements: Personal conflicts should not influence risk evaluations.

C. Automatic high-risk designation: This lacks a factual basis and undermines objectivity.

Conclusion:Option D ensures objectivity and credibility in the fraud risk assessment.

References:ACFE guidelines on objectivity in fraud risk assessment​​.

ACFE research highlights that an unwillingness to share duties is one of the most common red flags exhibited by fraud perpetrators. This behavior often indicates a desire to conceal fraudulent activities. Most fraudsters do not have prior convictions, and frauds committed by executives tend to cause higher losses compared to those committed by staff-level employees.

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This scenario is an example of punishment. Punishment involves introducing a consequence (in this case, the loss of responsibility for cross-departmental projects) to discourage undesirable behavior. The manager uses this approach to address Devon’s negative attitude and to promote better cooperation with other departments in the future.

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ï‚· CFE Ethical Responsibilities:

As per the ACFE Code of Professional Ethics, fraud examiners must ensure transparency in their professional conduct. They cannot promise confidentiality if the information must be disclosed to management or other authorities as part of the investigation.

ï‚· Why D is Correct:

Agreeing to confidentiality in this situation would breach ethical and legal obligations, especially if the information pertains to fraud or misconduct that the organization needs to address.

ï‚· Why Other Options are Incorrect:

A and B: Attempting to maintain confidentiality is misleading and unprofessional.

C: Taking the request directly to management without clarification could breach trust prematurely​​.

Five Components of COSO’s Internal Control Framework:

A. Control activities: Policies and procedures to ensure objectives are met.

C. Risk assessment: Identifying and analyzing risks.

D. Monitoring: Ongoing evaluation of control effectiveness.

Control environment: Includes the tone at the top and organizational ethics.

Information and communication: Facilitates the flow of relevant information.

Explanation of Ethical Culture:

While ethical culture is critical to the control environment, it is not one of the five standalone components of the framework.

Conclusion:Ethical culture is not a separate component but a part of the control environment.

References:COSO Internal Control—Integrated Framework documentation​​.

ï‚· ACFE Code of Professional Ethics:

CFEs must not make definitive statements about the absence of fraud, as such statements can mislead stakeholders and compromise professional integrity.

ï‚· Why A is Correct:

Jane cannot state the company is "free of fraud" because no examination can guarantee the complete absence of fraud, only that no evidence was found based on the scope of work.

ï‚· References:

ACFE ethical guidelines on reporting and assurance practices​​.

Understanding Compliance Theory:

Compliance theory emphasizes preventing crime through incentives for voluntary adherence to laws and proactive administrative measures.

By addressing potential violations early, compliance theory aims to deter criminal behavior before it occurs.

Application of the Theory:

Examples include economic benefits for following regulations and monitoring mechanisms to identify early signs of noncompliance.

Conclusion:The statement accurately describes compliance theory.

References:Criminological theories as outlined in ACFE study materials​​.