ACFE Fraud Risk Assessment 2

Question 1

Which of the following best describes the concept of 'inherent risk' in a fraud risk assessment?

Accepted Answer

The risk of fraud that exists before considering any controls

Answer

Inherent risk is the exposure to fraud that exists in the absence of any mitigating controls.

Question 2

A fraud risk assessment team discovers that management routinely overrides system-generated purchase order approvals. This finding is best classified as:

Accepted Answer

A fraud risk indicator related to management override of controls

Answer

Management override of controls is a classic fraud risk indicator that can enable financial statement fraud or asset misappropriation.

Question 3

When prioritizing fraud risks identified during an assessment, which factor is typically used alongside likelihood to determine overall risk rating?

Accepted Answer

Impact or significance

Answer

Fraud risks are typically rated by combining the likelihood of occurrence with the potential impact or significance of the fraud.

Question 4

The 'fraud risk universe' in an organization's fraud risk assessment refers to:

Accepted Answer

All conceivable fraud schemes the organization could face

Answer

The fraud risk universe encompasses all potential fraud schemes and scenarios that could affect an organization, regardless of whether they have occurred.

Question 5

Which COSO component is most directly addressed when an organization identifies fraud risk as part of its enterprise risk management process?

Accepted Answer

Risk assessment

Answer

COSO's ERM framework places fraud risk identification within the Risk Assessment component, which involves identifying and analyzing risks to achieving objectives.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Fraud Risk Assessment 2