CFE - Fraud Prevention

CFE - Fraud Prevention practice questions, page 10 of 11, with answer review and explanations.

Question 46

Which of the following is TRUE regarding corporate governance?

  1. Fraud risk management is considered to be the foundation of effective corporate governance
  2. Effective corporate governance practices are most necessary in an organization in which the owners are also the individuals responsible for setting the corporate strategy
  3. Corporate governance’s primary purpose is to ensure the accuracy of the organization’s financial reports
  4. An entity’s corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization

Question 47

According to the 2020 Report to the Nations, __________ schemes are the most common form of occupational fraud, while _________ schemes are the costliest form of occupational fraud.

  1. Asset misappropriation; corruption
  2. Asset misappropriation; financial statement fraud
  3. Corruption; asset misappropriation
  4. Financial statement fraud; corruption

Question 48

Which of the following is one of the recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

  1. Develop a written charter for management
  2. Have a mandatory independent audit committee
  3. Have adequate compensation committee resources and authority
  4. Give shareholders oversight of hotline reporting programs.

Question 49

A report by a fraud examiner may be privileged from disclosure in certain circumstances, but it does not have an absolute legal privilege.

  1. True
  2. False

Question 50

During an external audit of an organization’s financial statements, Peter, the external auditor, uncovers significant internal control deficiencies at the audit client’s organization. He believes these deficiencies could result in a material misstatement of the financial statements. Which of the following should Peter do with regard to these findings?

  1. Peter should provide a written communication about the findings to those charged with governance
  2. Peter should report the findings in writing directly to the appropriate regulatory agencies
  3. Peter should discreetly work with senior management to correct the underlying internal control deficiencies
  4. Peter should make a public announcement that he is withdrawing from the audit engagement