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

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.

Data and transaction monitoring are strongest when performed continuously or on an ongoing, near-real-time basis. Continuous monitoring helps organizations identify red flags, anomalous transactions, and control breakdowns earlier than periodic manual reviews. This supports prevention because employees are less likely to commit fraud when they know transactions are being monitored, and it supports detection because suspicious activity can be flagged quickly. Continuous auditing and continuous monitoring are not simply manual processes; they usually involve automated analytics, exception reporting, and repeated testing. It is also inaccurate to say analytics are only useful for detection and investigation, because monitoring can deter misconduct and help management strengthen controls. Internal audit may use continuous auditing, but ongoing transaction monitoring can also be part of management’s fraud prevention program. Therefore, option B is correct.

Rational choice theory posits that criminal behavior is a result of deliberate decision-making. According to the ACFE manual:

“Rational choice theory assumes that individuals weigh the expected benefits of committing a crime against the possible consequences. If the perceived benefits outweigh the perceived risks, the individual may choose to offend.”

Laura’s conduct is best explained by pressure and strain. Strain theory focuses on the stress individuals experience when they desire success, status, or financial achievement but believe they lack legitimate means to obtain it. Laura compares herself with friends who display professional and financial success, then feels frustrated and inadequate. Her fraud is not primarily caused by learning criminal behavior from others, because the facts do not show that her friends taught or encouraged fraud. It is also not simply lack of advancement, because the scenario centers on social comparison and emotional pressure. Environmental stressors is too broad. Laura’s desire to reduce negative feelings and gain social status through misuse of the company credit card fits the pressure-and-strain explanation. Therefore, option D is correct.

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.

Defining Fraud Risk Management Objectives:

Management should focus on tailoring objectives to the organization ' s needs, examining past fraud incidents, and balancing costs with benefits. Assigning a quantitative measure to risk appetite, while potentially useful, is not a requirement for effective fraud risk management.

Analysis of Options:

A. Examining previous frauds:This helps identify vulnerabilities and design controls.

B. Balancing costs and benefits:Essential to ensure the program ' s efficiency and feasibility.

D. Tailoring objectives:Necessary for aligning the program with organizational goals.

Conclusion:Option C is false because assigning a quantitative measure to risk appetite is not mandatory in defining fraud risk management objectives.

Comprehensive and Detailed in Depth Explanation:

The COSO framework outlines monitoring as one of its five core components, which involves evaluating the effectiveness of internal controls over time. Monitoring includes both ongoing evaluations and separate evaluations, which is exactly what Julia is initiating. This distinguishes monitoring (correct) from control activities (which pertain to execution of policies), risk assessment (which identifies and analyzes risks), and control environment (which is the tone at the top).

 Fraud Risk Reduction Objectives:

Inherent fraud risk:The risk present before any controls are applied.

Residual fraud risk:The remaining risk after controls have been implemented.

 Why D is Correct:

The goal of anti-fraud controls is to minimize residual risk to acceptable levels, recognizing that complete elimination of risk is unattainable.

 Why Other Options are Incorrect:

A and C:It is impractical to completely eliminate inherent or residual fraud risks.

B:Residual risk should be lower than inherent risk, but controls aim for significant reduction​