CFE Fraud Prevention Programs 5

Question 1

Which anti-fraud measure most directly addresses the 'rationalization' element of the fraud triangle?

Accepted Answer

Enforcing a zero-tolerance fraud policy communicated to all employees

Answer

A clearly communicated zero-tolerance policy challenges the rationalizations fraudsters use by making clear that no excuse justifies dishonest behavior.

Question 2

A company implements continuous monitoring software that flags all journal entries posted after business hours. This is an example of which type of control?

Accepted Answer

Detective control

Answer

Flagging unusual journal entries is a detective control because it identifies anomalies after they occur rather than stopping them beforehand.

Question 3

Under the Sarbanes-Oxley Act, Section 301 requires audit committees to establish procedures for:

Accepted Answer

Receiving, retaining, and treating complaints regarding accounting and internal controls, including anonymous employee submissions

Answer

SOX Section 301 mandates that audit committees establish confidential, anonymous complaint procedures — essentially requiring ethics hotlines for public companies.

Question 4

What is the concept of 'anti-fraud training' specifically designed to accomplish among non-financial employees?

Accepted Answer

Help employees recognize red flags of fraud and understand their reporting obligations

Answer

Anti-fraud training equips employees at all levels to recognize warning signs and empowers them to report concerns through appropriate channels.

Question 5

Which of the following represents a key difference between fraud prevention and fraud detection controls?

Accepted Answer

Prevention controls stop fraud before it occurs; detection controls identify fraud after it has happened

Answer

Prevention controls (like approvals and access restrictions) stop fraud from occurring, while detection controls (like reconciliations and audits) identify fraud that has already taken place.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Fraud Prevention Programs 5