CFE Fraud Risk Assessment 4

Question 1

Which professional standard requires auditors to assess the risk of material misstatement due to fraud when planning an engagement?

Accepted Answer

SAS No. 99 / AU-C 240

Answer

SAS No. 99 (codified as AU-C Section 240) requires auditors to specifically consider fraud risk factors and adjust audit procedures accordingly when planning an engagement.

Question 2

What term describes the degree to which management and employees are committed to creating a culture of ethical behavior and fraud awareness?

Accepted Answer

Tone at the top

Answer

Tone at the top refers to the ethical climate set by senior leadership, which is a primary determinant of the organization's overall anti-fraud culture.

Question 3

Which of the following is the MOST common reason employees fail to report suspected fraud?

Accepted Answer

Fear of retaliation from management or colleagues

Answer

Research consistently shows that fear of retaliation is the leading barrier to fraud reporting, underscoring the need for robust whistleblower protections.

Question 4

When assessing fraud risk at the account level, which of the following factors should receive the MOST weight?

Accepted Answer

The susceptibility of the account to manipulation and the materiality of the balance

Answer

Accounts that are highly susceptible to manipulation (e.g., estimates, reserves) and material in size warrant the greatest fraud risk attention.

Question 5

Which component of the COSO Internal Control framework is most directly concerned with fraud risk assessment?

Accepted Answer

Risk Assessment

Answer

The Risk Assessment component of COSO specifically includes identifying and analyzing risks, including fraud risks, that may prevent the organization from achieving its objectives.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Fraud Risk Assessment 4