CFE Fraud Prevention Programs 3

Question 1

Which of the following BEST describes a 'control environment' as it relates to fraud prevention?

Accepted Answer

The overall attitude, awareness, and actions of management regarding internal controls

Answer

The control environment is the foundation of internal control, shaped by management's attitude and the ethical tone they set for the organization.

Question 2

A company requires all employees to take vacations of at least one consecutive week. What fraud scheme is this policy specifically designed to detect?

Accepted Answer

Check tampering and lapping schemes

Answer

Mandatory vacations expose lapping and check-tampering schemes because a substitute must handle the work, making it difficult for the fraudster to continue concealment.

Question 3

Which component of the COSO framework addresses the organization's risk appetite and tolerance for fraud risk?

Accepted Answer

Risk Assessment

Answer

Risk Assessment under COSO includes identifying and analyzing fraud risks and determining the organization's tolerance for those risks.

Question 4

What is the key advantage of using data analytics in a proactive fraud prevention program?

Accepted Answer

It detects anomalies and patterns that may indicate fraud before significant losses occur

Answer

Data analytics continuously monitors transactions for red flags, enabling earlier detection and limiting fraud losses compared to periodic manual reviews.

Question 5

Which scenario represents a segregation of duties violation that creates fraud risk?

Accepted Answer

The same clerk who approves vendor invoices also signs the payment checks

Answer

Allowing one person to both approve invoices and issue payments eliminates a key check, enabling them to create fictitious payables and steal funds.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Fraud Prevention Programs 3