CFE - Fraud Prevention

CFE - Fraud Prevention practice questions, page 4 of 11, with answer review and explanations.

Question 16

Which of the following statements is TRUE?

  1. Educating employees about hotlines and reporting programs has a very limited effect on preventing fraud
  2. Most experts agree that it is harder to prevent frauds than to detect them
  3. Controls are not effective in preventing theft and fraud if those at risk do not know of the presence of possible detection
  4. Conducting covert audits is among the most effective fraud prevention methods

Question 17

Which of the following is NOT included in the five fraud risk management principles described in Fraud Risk Management Guide, a joint publication by COSO and the ACFE?

  1. Performing comprehensive fraud risk assessments to identify specific fraud schemes
  2. Developing preventive and detective fraud control activities
  3. Communicating the expectations of these governing the fraud risk management program
  4. Eliminating all known fraud vulnerabilities in the organization

Question 18

Which of the following theories suggests that, when considering the possibility of violating a law, people are likely to ask themselves, “What will my family and friends think if they find out?”

  1. Behavioral theory
  2. Social control theory
  3. Routine activities theory
  4. Cognitive theory

Question 19

Reporting known incidents of fraud to law enforcement can be an effective fraud prevention mechanism.

  1. True
  2. False

Question 20

Joanna is leading the fraud risk assessment process for her organization. Which of the following considerations about the fraud risk assessment process is MOST ACCURATE and should be incorporated into Joanna's plans?

  1. If the individuals conducting the fraud risk assessment believe that fraud could not happen within the organization, then the assessment process should reflect that belief.
  2. To ensure the independence of the team members, a consultant or another external party must conduct the fraud risk assessment.
  3. The fraud risk assessment can be conducted effectively by people inside or outside of the organization.
  4. The fraud risk assessment is most effective when management's influence on the process is limited.