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

Comprehensive and Detailed in Depth Explanation:

The Treadway Commission emphasized strengthening the internal audit function as a key fraud deterrent. This includes ensuring auditors have adequate resources, authority, and independence to carry out their duties. While formal structures like audit committee charters are useful, the commission specifically focused on functional empowerment of internal audit.

onflicts of Interest Under the ACFE Code of Professional Ethics:

Fraud examiners must avoid situations that compromise their objectivity, independence, or professional duties.

Disclosure of ownership does not eliminate the conflict of interest if it could impair objectivity.

Analysis of Other Options:

A, C, and D:All are clear conflicts of interest explicitly prohibited under the ACFE Code.

Conclusion:Option B is not prohibited under the ACFE Code but remains problematic if disclosure does not adequately address independence concerns.

Integrity in Fraud Examination:

Integrity involves critical thinking, independence, and prioritizing ethical principles over personal gain. Healthy debate and differences of opinion are integral to maintaining objectivity.

Why Option D is Incorrect:

Avoiding differences of opinion contradicts the need for professional skepticism and robust analysis in fraud examination.

Conclusion:Integrity does not require the avoidance of differences of opinion, making D the correct answer.

Effective Background Check Policies:

Verifying employment history involves more than just confirming dates. It includes understanding job roles, responsibilities, and performance. Solely asking for employment dates does not provide sufficient information to assess fraud risk.

Analysis of Other Options:

B. Background checks for cash-handling roles:This is critical for reducing fraud risks.

C. Background checks for promotions:This ensures that employees in sensitive positions have maintained integrity since hire.

D. Contacting references:Essential to gain insights into the candidate ' s character and reliability.

Conclusion:Option A is false because it suggests an overly simplistic approach to employment verification.

McCaghy ' s Perspective on Organizational Deviance:Criminologist Charles McCaghy identified regulatory pressure as a significant factor influencing organizational deviance. Excessive or poorly implemented regulations can lead companies to cut corners or engage in fraudulent behavior to remain competitive.

Supporting Analysis:

Regulatory pressure can create a perception that compliance is too costly or burdensome, leading to unethical practices.

This aligns with the concept of " strain theory, " where organizations under pressure may resort to deviance.

Conclusion:McCaghy ' s assertion that regulatory pressure is a key driver of organizational deviance is accurate.

The White-Collar Crime chapter summarizes ACFE research on occupational fraud perpetrators. In the section addressing perpetrators’ criminal backgrounds, the manual states that the vast majority of occupational fraudsters have no prior history of criminal fraud convictions and notes that only a small percentage had previously been convicted of a fraud-related offense. It concludes from these findings that most occupational fraudsters are first-time offenders. The manual also explains elsewhere that owners and executives tend to cause much larger median losses than lower-level employees, which eliminates option D. Because the question asks which statement is true according to ACFE research, the best answer is that most employees who commit occupational fraud are first-time offenders. This is a recurring finding in ACFE studies cited by the manual.

Steve Albrecht ' s Research on Fraud Motivation:

Personal factors like " living beyond their means " are commonly cited as a driver of fraudulent behavior.

Organizational factors, such as excessive trust in key employees, create opportunities for fraud by reducing oversight and enabling unethical behavior.

Analysis of Options:

A. High personal debt:This can be a motivator, but it is less common than " living beyond their means. "

B. Revenge:Rarely a primary driver of fraud.

D. Desire for recognition:This may motivate some individuals, but it is not as prevalent as financial pressure and opportunity.

Conclusion:Option C reflects the most common personal and organizational factors motivating fraudsters.

Due Diligence for Large Orders on Credit:

Before extending credit, it is critical to assess the financial stability of the new customer to mitigate credit risk.

Examining net worth provides a direct measure of ABC’s ability to fulfill financial obligations.

Analysis of Other Options:

A. Corruption risk countries:Due diligence should be applied universally, not selectively.

B. No verification needed:Verification is essential, especially for new customers.

D. Same due diligence for all customers:While consistency is important, the level of due diligence may vary based on transaction specifics.

Conclusion:Examining ABC ' s net worth is a necessary step in the due diligence process.

Information, communication, and reporting involve the continual process of gathering and sharing relevant information across an organization to support decision-making and risk management. This ensures that all stakeholders are informed and that information flows effectively to enhance organizational performance.

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