ACFE Fraud Risk Assessment 5

Question 1

Which of the following is a key limitation of relying solely on past fraud losses to assess current fraud risk?

Accepted Answer

Past losses reflect detected frauds only and may miss undetected schemes

Answer

Historical fraud loss data only captures detected and reported incidents, leaving undetected frauds — which may represent the majority — entirely unmeasured.

Question 2

In fraud risk assessment terminology, 'risk tolerance' refers to:

Accepted Answer

The amount of residual fraud risk an organization is willing to accept

Answer

Risk tolerance defines the level of residual fraud risk that the board and management consider acceptable given the cost of controls.

Question 3

Which of the following best illustrates 'segregation of duties' as a fraud prevention control?

Accepted Answer

The employee who approves vendor invoices is different from the one who processes payment

Answer

Segregation of duties requires that no single individual control all phases of a transaction, so that approval and payment functions are separated.

Question 4

A fraud risk assessment reveals that an organization's anonymous hotline has received zero reports over three years. A fraud examiner should interpret this finding as:

Accepted Answer

Potentially indicating low awareness of the hotline or fear of retaliation rather than absence of fraud

Answer

Zero reports on a hotline may reflect poor awareness, lack of trust, or fear of retaliation rather than an absence of fraud.

Question 5

Which of the following fraud schemes would a fraud risk assessment focused on the revenue cycle most likely identify as a key risk?

Accepted Answer

Fictitious sales recorded to inflate revenue

Answer

Fictitious or premature revenue recognition is the primary financial statement fraud risk in the revenue cycle.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Fraud Risk Assessment 5