CFE - Fraud Prevention

CFE - Fraud Prevention practice questions, page 7 of 11, with answer review and explanations.

Question 31

Which of the following would MOST LIKELY be a violation of the ACFE Code of Professional Ethics?

  1. Green, a CFE, uncovered several material internal control deficiencies unrelated to the financial statement fraud he was investigating. In his final report to management, Green included information about the deficiencies even though they were unrelated to the situation he was hired to investigate.
  2. Stephanie, a CFE, accepted a fraud examination assignment and then instructed a lower-level employee to assess the company’s cash records for signs of fraud. She took his word when he said there was no evidence of wrongdoing and ended up failing to uncover a very costly fraud scheme.
  3. Susan, a CFE, was hired by a client to conduct a fraud examination but found nothing amiss. A year later, she received a legal order from the local prosecutor’s office to provide the client’s file. Susan complied with the court order, even though she did not have the client’s authorization to do so.
  4. All of the above are violations.

Question 32

Blue, a Certified Fraud Examiner (CFE), had an ethical dilemma regarding the contract governing one of his professional engagements. Which of the following sources of guidance would be considered the lowest level of reference to help Blue in determining the most ethical course of action?

  1. Contract law
  2. The ACFE Code of Professional Ethics
  3. The handling of similar situations by individuals he respects
  4. Moral philosophical principles

Question 33

Which of the following is NOT a responsibility of the organization’s board of directors?

  1. Serving as the intermediaries between shareholders and management
  2. Acting as guardians of the organization's resources and assets
  3. Directing employees to execute business activities
  4. Assessing the strategy and underlying purpose of management's decisions and actions

Question 34

Who is ultimately responsible for responding appropriately to instances of fraud within an organization?

  1. Internal auditors
  2. Management
  3. The audit committee
  4. General counsel

Question 35

Gray, an independent Certified Fraud Examiner (CFE), was hired by Green, president of the ABC Corporation, to investigate allegations that one of ABC’s employees is taking kickbacks. During the investigation, Gray learns that Green is involved in an unrelated fraud. Under the ACFE Code of Professional Ethics, Gray should:

  1. Not disclose the information about Green.
  2. Resign from the engagement.
  3. Report Green to law enforcement.
  4. Tell the company’s board of directors about Green.