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

Findings from the 2020 Report to the Nations:

Tips are the most common method of detecting fraud, accounting for over 40% of detected cases.

Whistleblower hotlines and other reporting mechanisms are vital for obtaining tips.

Analysis of Other Options:

A. Internal audit: While effective, it is less common than tips.

B. Confession: Rarely the initial method of detection.

D. External audit: Detects fraud in a smaller percentage of cases.

Conclusion:Tips are the most common method of fraud detection according to the 2020 Report to the Nations.

References:2020 ACFE Report to the Nations on Occupational Fraud and Abuse​​.

Internal Auditor's Role in Fraud Risk Management:

Internal auditors are not directly responsible for establishing or maintaining anti-fraud controls (Option D). This responsibility lies with management.

They are also not responsible for obtaining reasonable assurance that financial statements are free of fraud (Option A). This is the role of external auditors.

Oversight of management's fraud risk actions (Option B) is primarily a governance role, not the auditor's direct responsibility.

Internal auditors focus on identifying and assessing fraud risks, evaluating controls, and recommending further action when necessary.

Conclusion:Option C aligns with the internal auditor's responsibilities as per the standards outlined in the ACFE's fraud risk management framework.

References:ACFE documentation on internal auditing responsibilities and fraud risk assessments​​.

Best Practices for Protecting Whistleblowers:

Ensuring a safe environment for whistleblowers is critical to fostering an ethical organizational culture.

Establishing formal consequences for retaliation protects whistleblowers and promotes trust.

Analysis of Options:

A. Rules only for lower-level employees: Whistleblower protections must apply to all employees, regardless of rank.

B. Listing every type of misconduct: Comprehensive policies are good, but they do not need to enumerate all past misconduct.

C. Internal communication only: Communicating whistleblower procedures to external stakeholders (e.g., regulators) can be critical.

D. Formal consequences for retaliation: This is essential to discourage retaliatory actions and ensure fairness.

Conclusion:Establishing formal consequences for retaliation is the most accurate and aligned with best practices.

References:ACFE guidelines on whistleblower protections and ethical policies​​.

Modern Criminological Studies on White-Collar Crime:Studies highlight that white-collar crimes are often influenced by situational factors rather than inherent criminal traits. The availability of organizational opportunities to commit fraud plays a crucial role.

Analysis of Options:

A. Cultural ties: Less significant in white-collar crime.

B. Criminal history: White-collar criminals often have no prior criminal records.

D. Social class: While white-collar crime is associated with higher social classes, the determinant factor is the opportunity presented within an organization.

C. Organizational opportunity: This aligns with the fraud triangle concept, where opportunity is a primary driver.

Conclusion:Organizational opportunity is the determinant aspect of white-collar crime.

References:ACFE study materials and modern criminology texts on white-collar crime​​.

Proactive Fraud Auditing Procedures:

Analytical reviews are effective for identifying large or unusual trends and anomalies, not necessarily small frauds.

Other tools, such as detailed transaction testing, are better suited for uncovering small frauds.

Analysis of Other Options:

A. Element of surprise: A key feature of fraud audits.

C. Fraud assessment questioning: Valid as part of the audit process.

D. Management’s intentions: Proactive procedures signal a strong stance against fraud.

Conclusion:Option B is false because analytical reviews are better at detecting significant anomalies rather than small frauds.

References:ACFE materials on fraud auditing techniques​​.