CFE-Fraud-Prevention-and-Deterrence Exam Dumps - ACFE Certified Fraud Examiner Questions and Answers

 Due Diligence in High-Corruption Risk Transactions:

When operating in high-risk environments, enhanced due diligence is critical. This includes evaluating payment methods, transaction patterns, and the customer's reputation.

 Why A is Correct:

Analyzing purchasing patterns and payment methods helps identify red flags such as unusual payment terms or volumes inconsistent with Green’s business profile.

 Why Other Options are Incorrect:

B: Due diligence is necessary regardless of payment terms.

C: Enhanced due diligence for high-risk countries does not constitute discrimination.

D: Ignoring due diligence poses significant compliance and reputational risks.

 References:

ACFE guidance on due diligence and anti-corruption practices in global commerce​​.

 Diane Vaughan's Theory on Organizational Crime:

Vaughan argued that organizational environments prone to crime exhibit a "normalization of deviance," often influenced by management decisions that misalign employee incentives with organizational objectives.

 Why C is Correct:

Misaligned goals create conflicting priorities, increasing the likelihood of unethical behavior to meet individual or team objectives.

 Why Other Options are Incorrect:

A:Challenging the status quo promotes innovation and ethical accountability.

B:Social functions fostering loyalty do not inherently encourage crime​​.

Routine activities theory holds that crime occurs when three elements converge: (1) a motivated offender, (2) a suitable target, and (3) the absence of a capable guardian. “The lack of societal ethics” is not part of this theoretical model.

Understanding the ACFE Code of Professional Ethics:The ACFE Code of Professional Ethics requires Certified Fraud Examiners to demonstrate competence and due care in their professional services. Specifically:

Rule 2 states that CFEs must "perform all professional engagements with due diligence."

Rule 4 emphasizes that CFEs must "avoid conduct that discredits the profession or the Association."

Competence and Due Care:

Benjamin, despite his attendance at a seminar on money laundering, lacks the requisite expertise or experience in investigating complex money laundering cases. Accepting an engagement of this nature without possessing adequate training, knowledge, or resources indicates a failure to exercise due care.

The Code emphasizes the importance of competence, meaning professionals must decline engagements that exceed their expertise unless they involve qualified individuals or teams.

Violation Assessment:

By choosing to conduct the investigation alone, Benjamin disregards the ethical requirement to ensure competence and quality in professional work. This likely jeopardizes the investigation's integrity and results.

This conduct could lead to suboptimal outcomes, legal liabilities, and reputational harm, which discredit the profession, violating the ACFE ethical framework.

Conclusion:Benjamin's decision is a breach of the ACFE Code of Professional Ethics because he failed to ensure adequate preparation, skills, and resources for the engagement.

Employee background checks are considered a preventive control because they are designed to identify potentially risky hires before employment. The manual states that “background checks are a front-line preventive measure in combating fraud by screening out individuals who pose higher risk.”

 ACFE Code of Professional Ethics:

The ACFE Code of Ethics prohibits fraud examiners from making absolute statements about the absence of fraud. Fraud cannot be definitively ruled out based on an examination's findings.

 Why B is Correct:

Stevens cannot state that the organization is "free of fraud," as fraud detection is inherently limited by the scope and methods of the examination. Such a statement could mislead stakeholders and compromise ethical standards​​.

Scope of Fraud Risk Assessment:

The fraud risk assessment team must consider various factors, including:

A. Incentive programs:Can create pressures that lead to fraud.

B. Management override of controls:A key risk for fraud occurring despite existing safeguards.

C. Risks to reputation:Fraud incidents can harm the organization's public image.

Comprehensive Discussion:

Considering all these factors ensures a thorough identification of inherent fraud risks.

Conclusion:The fraud risk assessment team should discuss all listed items.