acfe CFE FRAUD PREVENTION AND DETERRENCE Exam Questions
Questions for the CFE FRAUD PREVENTION AND DETERRENCE were updated on : Nov 21 ,2025
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Question 1
[Fraud Deterrence] Christopher is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While conducting his audit procedures, he discovers evidence of a fraud involving Jeffrey, the company’s chief executive officer. Which of the following is Christopher’s BEST response to these findings?
A. Christopher should immediately report his findings to the relevant government authority.
B. Christopher should report his findings to those charged with governance of the organization.
C. Christopher should confront Jeffrey with his audit findings and try to get a confession.
D. Christopher should not disclose his findings to any other parties due to legal liability.
Answer:
B
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Question 2
[Ethical Responsibilities of the Fraud Examiner] Which of the following scenarios would MOST LIKELY be considered a violation of the ACFE Code of Professional Ethics?
A. Grace, a CFE, uncovered internal control deficiencies that were material but unrelated to the financial statement fraud she was investigating. In her final report to management, Grace included information about the deficiencies despite their being unrelated to the situation she was hired to investigate.
B. Eric, a CFE, accepted a fraud examination assignment and then instructed his employee to assess the company’s accounts receivable for indications of fraud. He accepted the employee’s work that showed no evidence of fraud without conducting his own assessment. However, the employee missed some key information, causing Eric to fail to uncover a costly fraud scheme.
C. Mae, a CFE, was hired by a client to conduct a fraud examination but found nothing unusual. A year later, she received a legal order from the local prosecutor's office to provide the client’s file. Mae complied with the court order despite not having the client's authorization to provide the file.
D. All of the above are violations.
Answer:
D
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Question 3
[Corporate Governance] Which of the following is included in the G20/OECD Principles of Corporate Governance?
A. A requirement for corporations to establish a legal, regulatory, and institutional framework to support good governance practices
B. A call to support the equal treatment of all members of an organization's governing body
C. Guidance regarding appropriate board structures, responsibilities, and procedures
D. An examination of the importance of effectively designed and implemented internal control mechanisms within an organization
Answer:
C
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Question 4
[Fraud Prevention] Which of the following statements regarding monitoring employees for warning signs of fraud is MOST ACCURATE?
A. Employees should be made aware that management is watching for unexplained lifestyle and behavioral changes that might indicate fraudulent conduct.
B. An increase in employee wealth is always a sign of fraud that should be investigated.
C. Employees who steal do not commonly display lifestyle or behavioral warning signs of their misdeeds.
D. Managers should be instructed that it is a violation of employee privacy rights to monitor employees for behaviors that are indicative of fraud.
Answer:
A
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Question 5
[Fraud Prevention] To reinforce an anti-fraud culture, it is BEST for an organization's management to:
A. Use a checklist of initiatives to ensure that all the elements of a strong corporate culture are in place.
B. Demonstrate the same ethical behavior required of individuals at lower levels of the company.
C. Discipline any employees who question their direct supervisor’s behavior or policies.
D. Discourage employees from voicing concerns regarding senior leadership's actions or decisions.
Answer:
B
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Question 6
[Fraud Risk Management] Fraud risks related to corruption include:
A. Reporting revenue in the wrong accounting period
B. Fraudulent customer payments
C. Espionage by competitors
D. Payment of bribes to procure business
Answer:
D
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Question 7
[Fraud Prevention] Which of the following is a TRUE statement regarding the role of a well-designed organizational structure as part of an anti-fraud program?
A. A confused organizational structure makes it harder for a fraudster to perpetrate and conceal their misdeeds.
B. Effectively documenting and communicating the organizational structure to all employees can help prevent fraud.
C. Formally establishing and communicating the proper flow of information in an organization can hinder its fraud prevention initiatives.
D. Displaying organizational and departmental hierarchies can help fraudsters select their targets.
Answer:
B
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Question 8
[White-Collar Crime] The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal control as:
A. A process implemented to review how well the organization’s risk management capabilities have increased value over time and how they will continue to drive value for the organization
B. A process, effected by an entity’s board of directors, management, and other personnel,designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance
C. A process involving personnel at all levels of the organization that aims to eliminate all uncertainty and risk while also ensuring the achievement of organizational goals
D. A process aimed at proactively identifying, evaluating, and addressing an organization's vulnerabilities to fraud by both internal and external sources
Answer:
B
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Question 9
[Fraud Prevention] Which of the following choices is an example of an anti-fraud control that is primarily preventive in nature?
A. Continuous audit techniques
B. Proactive data analysis techniques
C. Employee background checks
D. Whistleblower hotline
Answer:
C
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Question 10
[Fraud Risk Management] Which of the following is NOT one of the three elements that have the most influence on crime according to the routine activities theory?
A. The presence of motivated offenders
B. The absence of capable guardians
C. The lack of societal ethics
D. The availability of suitable targets
Answer:
C
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Question 11
[Fraud Risk Management] According to ACFE research, which of the following is TRUE?
A. Frauds committed by staff-level employees cause higher median losses than those committed by owners and executives.
B. Men and women commit similar amounts of occupational frauds.
C. Complaints about family problems is the most reported behavioral red flag displayed by fraud perpetrators.
D. Most employees who commit occupational fraud are first-time offenders.
Answer:
D
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Question 12
[Fraud Deterrence] Aaron, a government auditor, is conducting a financial statement audit of a public-sector entity in accordance with the International Standards of Supreme Audit Institutions. Which of the following is TRUE regarding Aaron’s consideration of fraud during this engagement?
A. Aaron’s audit objectives are likely narrower than those of a private-sector financial statement audit.
B. Aaron should remain alert for fraud but does not need to consider the potential for abuse or other misconduct during the audit engagement.
C. Aaron likely does not have the ability to withdraw from the engagement, even if fraud is identified during the audit.
D. Aaron does not need to comply with the requirements found in International Standard on Auditing 240, as they do not apply to the engagement.
Answer:
C
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Question 13
[Fraud Prevention] A professional organization's code of conduct serves which of the following purposes?
A. A code offers fewer and less direct solutions to professional ethical dilemmas than might exist under general ethical principles.
B. A code acts as a substitute for legal and regulatory requirements that apply to the profession.
C. A code provides answers to all ethical dilemmas that the organization's members might encounter.
D. A code facilitates practical enforcement and internal discipline throughout a profession.
Answer:
D
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Question 14
[Fraud Risk Management] According to International Organization for Standardization (ISO) 31000:2018, an effective and efficient risk management program contains all of the following principles EXCEPT:
A. The program is structured and comprehensive.
B. The program is based upon the best available information.
C. The program is integrated into only high-risk organizational activities.
D. The program is customized and proportionate to the organization's operations and objectives.
Answer:
C
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Question 15
[White-Collar Crime] Which of the following components of the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Enterprise Risk Management—Integrating with Strategy and Performance refers to an organization’s ability to continually assess how well its enterprise risk management (ERM) capabilities and practices have increased value over time and how they will continue to drive value for the organization?