CFE Fraud Prevention Programs 4

Question 1

Which fraud risk factor is most directly reduced by conducting thorough background checks before hiring?

Accepted Answer

Capability to commit fraud

Answer

Background checks help screen out candidates with a history of dishonesty or relevant crimes, reducing the pool of people with demonstrated capability to commit fraud.

Question 2

An ethics hotline receives a tip alleging payroll fraud. To maintain tipster confidence in the program, the organization should PRIMARILY ensure:

Accepted Answer

The tipster's identity is protected and the tip is investigated promptly

Answer

Confidentiality and prompt follow-through are the two pillars that maintain employee willingness to report suspected fraud.

Question 3

A fraud risk assessment reveals that the accounts payable department poses the highest inherent risk. Which control would BEST reduce the residual risk?

Accepted Answer

Implementing three-way matching of purchase orders, receiving reports, and invoices

Answer

Three-way matching prevents payment of fictitious or inflated invoices by requiring agreement among the purchase order, receipt of goods, and vendor invoice.

Question 4

Which action BEST demonstrates that an organization has integrated its code of conduct into daily operations rather than treating it as a compliance formality?

Accepted Answer

Including ethical conduct metrics in performance evaluations and reward systems

Answer

Tying performance reviews and rewards to ethical conduct makes the code operationally meaningful and signals that ethics is a real organizational priority.

Question 5

When designing a fraud risk assessment, which factor should be evaluated to determine inherent fraud risk?

Accepted Answer

The likelihood and potential impact of various fraud schemes absent controls

Answer

Inherent risk is assessed before considering controls — it reflects the raw exposure to each fraud scheme based on likelihood and magnitude.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Fraud Prevention Programs 4