CFE Ethical Obligations & Professional Conduct 5 — Questions and Answers
Question 1: A CFE's former client asks them to testify as a fact witness about a prior engagement. The CFE should:
- Refuse on the grounds of confidentiality
- Testify truthfully about facts within their personal knowledge (Correct answer)
- Only testify if paid an expert witness fee
- Require the client to waive privilege before cooperating
Correct answer: Testify truthfully about facts within their personal knowledge
As a fact witness, a CFE must testify truthfully about matters within their personal knowledge, though confidentiality issues should be reviewed with counsel.
Question 2: When a CFE identifies a potential conflict of interest mid-engagement, the preferred course of action is to:
- Complete the engagement quickly before the conflict becomes material
- Disclose the conflict to all affected parties and obtain consent or withdraw (Correct answer)
- Continue without disclosure if the conflict is minor
- Transfer all work to an uncredentialed team member
Correct answer: Disclose the conflict to all affected parties and obtain consent or withdraw
Mid-engagement conflicts must be disclosed to all affected parties, who then decide whether the CFE should continue or withdraw.
Question 3: A CFE is retained by an insurance company and discovers fraud was committed by the insurance company itself. The CFE's ethical duty is to:
- Report only to the client's audit committee as a courtesy
- Suppress the findings to protect the client relationship
- Report the findings objectively and consider the appropriate regulatory channels (Correct answer)
- Seek additional retainer before disclosing adverse findings
Correct answer: Report the findings objectively and consider the appropriate regulatory channels
A CFE must report findings objectively even when adverse to the retaining party, and must consider whether regulatory reporting obligations apply.
Question 4: The ACFE's ethical standards prohibit a CFE from making which type of statement about their qualifications?
- Listing their CFE credential on a business card
- Exaggerating or misrepresenting their experience or expertise (Correct answer)
- Describing the types of cases they have handled
- Stating they are a member of the ACFE
Correct answer: Exaggerating or misrepresenting their experience or expertise
Misrepresenting or exaggerating qualifications and experience is explicitly prohibited by the ACFE Code of Professional Ethics.
Question 5: A CFE is subpoenaed for work product from a completed engagement. The CFE should:
- Destroy documents not yet demanded to limit exposure
- Comply after consulting with legal counsel and notifying the client (Correct answer)
- Refuse to produce any documents absent client consent
- Produce all documents immediately without notifying the client
Correct answer: Comply after consulting with legal counsel and notifying the client
When subpoenaed, a CFE should consult legal counsel, notify the client, and produce documents as legally required while preserving any applicable privileges.
Question 6: Which action by a CFE would most clearly violate the principle of professional integrity?
- Declining to opine on matters outside their expertise
- Accepting an engagement in an unfamiliar industry with proper disclosure
- Altering interview notes after receiving pushback from management (Correct answer)
- Recommending that a client hire additional specialists
Correct answer: Altering interview notes after receiving pushback from management
Altering contemporaneous notes in response to pressure is a fundamental violation of professional integrity and may constitute obstruction.
Question 7: A CFE who is an ACFE member learns that another ACFE member has violated the Code of Professional Ethics. The CFE should:
- Publicly announce the violation to warn potential clients
- Report the violation to the ACFE's Ethics Committee (Correct answer)
- Handle the matter privately by warning the violating member
- Take no action unless personally harmed by the violation
Correct answer: Report the violation to the ACFE's Ethics Committee
Members who become aware of ethical violations by other ACFE members should report the matter to the ACFE's Ethics Committee for appropriate review.
CFE Ethical Obligations & Professional Conduct 5
A CFE's former client asks them to testify as a fact witness about a prior engagement.
The CFE should: