CFE Cheat Sheet 2026

The 30 highest-yield CFE facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. An employee submits expense reports every Friday for exactly $49.99. What fraud scheme does this pattern most likely suggest? → Structuring to avoid approval thresholds
2. Which of the following would most likely be classified as a 'nonadmitted asset' under SAP? → Furniture and equipment exceeding regulatory allowed limits
3. Which ratio directly measures a company's ability to service its debt obligations from operating earnings? → Interest coverage ratio (EBIT/Interest expense)
4. When implementing regulatory compliance & ethics practices, what should a CFE professional prioritize first? → Compliance with established standards and protocols
5. Which type of risk can be eliminated through portfolio diversification? → Unsystematic (idiosyncratic) risk
6. Under the Equal Credit Opportunity Act (ECOA), a lender who denies credit MUST provide the applicant with a notice of adverse action: → Within 30 days of receiving the completed application
7. Which of the following best describes a key competency required for risk assessment & mitigation in CFE certification? → Critical thinking and evidence-based decision making
8. Which asset allocation strategy automatically rebalances a portfolio by selling outperforming assets and buying underperforming ones? → Strategic (rebalancing) asset allocation
9. The Dodd-Frank Act's Volcker Rule primarily restricts federally insured depository institutions from: → Engaging in proprietary trading and owning certain hedge/private equity funds
10. Why is strategic planning essential in managing financial institutions? → To set long-term goals and adapt to market conditions
11. Which internal control principle requires that no single employee be able to both initiate and approve a financial transaction? → Segregation of duties
12. Which risk response strategy involves reducing the likelihood or impact of a risk through implementing controls? → Risk mitigation
13. In Certified Financial Examiner, what role does audit procedures & internal controls play in ensuring client/stakeholder satisfaction? → It builds trust through demonstrated competence and consistency
14. What is the significance of peer review in audit procedures & internal controls for CFE professionals? → It promotes accountability, knowledge sharing, and quality improvement
15. In horizontal analysis of financial statements, each line item is compared to: → The same line item in a prior period (base year)
16. A 'qualified mortgage' under the Dodd-Frank Act must include which feature? → Verification that the borrower has the ability to repay
17. What is a common indicator of potential financial fraud? → Unusual transactions or accounting discrepancies
18. When conducting a board-level review of a financial institution's strategic plan, directors should PRIMARILY evaluate: → Whether the plan's risk appetite aligns with capital adequacy and long-term sustainability
19. An insurance company fails to update its risk register after entering a new line of business. Which phase of the risk management cycle has been neglected? → Risk monitoring and review
20. Under SAP, how are policy acquisition costs (such as agent commissions) treated compared to GAAP? → Expensed immediately under SAP, but deferred and amortized under GAAP
21. What is the significance of ratio analysis in financial reporting? → To assess the company's financial health and performance
22. Which of the following best describes a key competency required for regulatory compliance & ethics in CFE certification? → Critical thinking and evidence-based decision making
23. Under IFRS, how are development costs treated when all required criteria are met? → Capitalized as an intangible asset and amortized
24. What is the role of risk management in financial institution operations? → To identify and reduce potential risks to protect the institution's assets
25. What is the significance of peer review in risk assessment & mitigation for CFE professionals? → It promotes accountability, knowledge sharing, and quality improvement
26. Which ratio is commonly used to measure an organization's profitability? → Return on assets (ROA)
27. A key risk indicator (KRI) that shows a metric approaching a threshold level MOST likely serves what purpose for management? → Providing an early warning signal for emerging risks
28. Which internal control activity BEST ensures that journal entries recorded in the general ledger are authorized and accurate? → Requiring supervisory approval of all manual journal entries with supporting documentation
29. Under the Home Mortgage Disclosure Act (HMDA), financial institutions must collect and report data primarily to: → Detect and deter discriminatory lending patterns
30. Which documentation practice is most important for regulatory compliance & ethics in the CFE field? → Maintaining complete, accurate, and timely records