acfe cfe fraud prevention and deterrence practice test
Certified Fraud Examiner - Fraud Prevention and Deterrence Exam
Last exam update: Nov 16 ,2025
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Question 1
[Ethical Responsibilities of the Fraud Examiner] Benjamin, a Certified Fraud Examiner (CFE). was contacted regarding an engagement to investigate a complex money laundering case spanning numerous international jurisdictions and involving multiple cutting-edge technologies. Benjamin had previously attended a seminar on investigating money laundering schemes, but he had no other training or experience in such cases. However, he accepted the engagement and chose to conduct the work himself. Benjamin's conduct would likely be a violation of the ACFE Code of Professional Ethics.
A.
True
B.
False
Answer:
A
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Question 2
[Fraud Deterrence] For its compliance program to be effective, an organization must promote the program through appropriate incentives for compliance.
A.
True
B.
False
Answer:
A
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Question 3
[Fraud Risk Management] In response to a risk identified during a fraud risk assessment, management decides to implement additional internal control measures. This response is known as:
A.
Assuming the risk
B.
Mitigating the risk
C.
Avoiding the risk
D.
Transferring the risk
Answer:
B
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Question 4
[Fraud Risk Management] Which of the following is TRUE regarding the communication of the fraud risk assessment process?
A.
The more personalized the communication, the more effective it will be in encouraging employees to participate
B.
The communication should be made in a format mat is most appropriate for the culture of the organization
C.
The communication should be visibly disseminated throughout the business
D.
All of the above
Answer:
D
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Question 5
[Ethical Responsibilities of the Fraud Examiner] Gray, an independent Certified Fraud Examiner (CFE), was hired by Green, president of the ABC Corporation, to investigate allegations that one of ABC's employees is taking kickbacks. During the investigation. Gray teams that Green is involved in an unrelated fraud. Under the ACFE Code of Professional Ethics. Gray should:
A.
Not disclose the information about Green.
B.
Report Green to law enforcement
C.
Tell the company's board of directors about Green.
D.
Resign from the engagement
Answer:
C
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Question 6
[Fraud Deterrence] Which of the following is TRUE regarding proactive fraud auditing procedures?
A.
Analytical review of the financial statements is best used to uncover small frauds that might be missed by other detection methods.
B.
Fraud assessment Questioning techniques are most appropriately used when attempting to determine who might be responsible for a particular fraud scheme.
C.
Implementing proactive fraud audit procedures demonstrates the organization's intention to aggressively look for possible fraudulent conduct.
D.
Surprise audit procedures are an effective fraud detection mechanism, but they do not help prevent fraud
Answer:
C
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Question 7
[Criminology and Ethics] The theory of differential association is used frequently lo explain white-collar criminality. Which of the following is NOT one of the assertions or principles of differential association?
A.
Criminal behavior is explained by an individual's general needs and values.
B.
Criminal behavior is acquired through participation with intimate personal groups.
C.
Criminal behavior is learned from other people in a process of communication.
D.
Criminal behavior is learned using the same mechanisms as other learning
Answer:
A
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Question 8
[Fraud Risk Management] Which of the following is FALSE regarding a fraud risk assessment?
A.
The objective of the assessment is to help the organization identify what makes it most vulnerable to fraud.
B.
The assessment should be used to improve employee fraud awareness
C.
The assessment team should consider how employees behave as part of its assessment
D.
The designation of an area as high risk should only occur if the assessment has conclusively revealed that fraud is occurring there.
Answer:
D
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Question 9
[Corporate Governance] Which of the following is NOT included in G20/OECD Principles of Corporate Governance (the Principles)?
A.
Guidance regarding appropriate board structures, responsibilities, and procedures
B.
Support for establishing stronger protection for foreign shareholders than for domestic shareholders
C.
A request that governments have in place an appropriate framework to support good corporate governance practices
D.
Recognition of the importance of the role of stakeholders in corporate governance
Answer:
B
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Question 10
[Fraud Risk Management] Which of the following is NOT an effective way to help prevent fraud through the organization's performance measurement and management programs?
A.
Including ethics-based metrics as a component of performance evaluations
B.
Providing regular training to ensure that all employees are sufficiently prepared to perform their tasks
C.
Establishing loosely defined job descriptions that allow employees flexibility in their roles
D.
Tying employee compensation to reasonable organizational performance goals
Answer:
B
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Question 11
[Criminology and Ethics] According to modern criminological studies, which of the following is the determinant aspect of white-collar crime?
A.
Cultural ties
B.
Criminal history
C.
Organizational opportunity
D.
Social class
Answer:
C
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Question 12
[Ethical Responsibilities of the Fraud Examiner] Which of the following would MOST LIKELY be a violation of the ACFE Code of Professional Ethics?
A.
Green a CFE, uncovered several material internal control deficiencies unrelated to the financial statement fraud he was investigating. In his final report to management. Green included information about the deficiencies even though they were unrelated to the situation he was hired to investigate.
B.
Stephanie, a CFE, accepted a fraud examination assignment and then instructed a lower-level employee to assess the company's cash records for signs of fraud. She took his word when he said there was no evidence of wrongdoing and ended up failing to uncover a very costly fraud scheme.
C.
Susan, a CFE, was hired by a client to conduct a fraud examination but found nothing amiss A year later, she received a legal order from the local prosecutor's office to provide the client's file. Susan complied with the court order, even though she did not have the client's authorization to do so.
D.
All of the above are violations
Answer:
D
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Question 13
[Fraud Deterrence] Patrick is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While undertaking his audit procedures, he discovers evidence that senior management has been fraudulently manipulating the financial statements. Which of the following is Patrick's BEST response to these findings?
A.
Patrick should confront management with his audit findings and try to get a confession.
B.
Patrick should immediately report his findings to local law enforcement authorities.
C.
Patrick should not disclose his findings to any other parties due to client confidentiality
D.
Patrick should report his findings to those charged with governance of the organization.
Answer:
D
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Question 14
[Corporate Governance] Which of the following principles of corporate governance pertains to the duty of the organization to act in the best interest of society?
A.
Transparency
B.
Responsibility
C.
Fairness
D.
Accountability
Answer:
B
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Question 15
[Fraud Risk Management] Which of the following statements is TRUE regarding how fraud examiners should exercise professional skepticism during a fraud examination engagement?
A.
Professional skepticism means beginning all assignments with the belief that something is amiss.
B.
Professional skepticism involves maintaining a mindset that no fraud has occurred
C.
Fraud examiners should form the engagement hypothesis without regard to the available preliminary information.
D.
Fraud examiners should not relax their skeptical attitudes under any circumstances.