Fraud Prevention Programs Flashcards
7 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fraud Prevention Programs flashcards as text
Which element is most critical when establishing a tone at the top for fraud prevention?
Answer: Senior management visibly modeling ethical behavior
Tone at the top requires senior leaders to demonstrably model the ethical conduct they expect, as employees take behavioral cues from leadership.
A hotline caller reports suspicion that a manager is falsifying expense reports. What should the organization do FIRST?
Answer: Conduct a preliminary assessment to determine if further investigation is warranted
A preliminary assessment determines whether the allegation has sufficient merit to warrant a full investigation before taking action.
What is the primary goal of job rotation policies in fraud prevention?
Answer: To limit the opportunity for any single employee to conceal fraudulent activity
Job rotation disrupts long-standing collusion opportunities and makes it harder for employees to perpetuate concealed fraud schemes over time.
According to the ACFE, approximately what percentage of occupational frauds are detected by tips?
Answer: About 43%
ACFE research consistently shows tips are the most common fraud detection method, accounting for roughly 43% of detected cases.
Which type of control is MOST effective at preventing procurement fraud before it occurs?
Answer: Mandatory dual approval for purchase orders above a set threshold
Requiring dual authorization for purchases above a threshold is a preventive control that stops unauthorized transactions before payment is made.
An organization discovers that its anti-fraud controls failed to prevent a $500,000 embezzlement. Which step best improves the control environment going forward?
Answer: Conduct a root-cause analysis to identify control gaps and remediate them
Root-cause analysis identifies the specific control weaknesses that allowed the fraud, enabling targeted remediation to prevent recurrence.
What does a 'clawback' provision in executive compensation primarily aim to achieve in fraud prevention?
Answer: Recovering bonuses paid based on fraudulent financial results
Clawback provisions allow organizations to reclaim compensation paid to executives whose bonuses were tied to financial results later found to be fraudulent.