Free Practice Questions for ACFE CFE-Fraud-Investigations-and-Legal-Issues Exam

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to criminal, the question asks about MOST ACCURATE, how criminal bargaining agreements are typically handled in jurisdictions where such agreements are allowed.

The correct answer is A: The defense generally has the discretion to decide whether to settle charges with a bargaining agreement..

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

“Deleted files are recoverable until they are overwritten because data is not erased until it is overwritten… Deleted files that have been overwritten generally are not recoverable”.

Other data such as time/date stamps, websites, or chats can often be retrieved.

A well-written fraud examination report should be accurate, clear, impartial, relevant, and complete enough to support the findings. Otis should include facts that could be potentially relevant to the case, even if some facts do not support the allegation. However, he should not overload the main report with full interview details when separate interview memoranda are more appropriate. Technical language should be avoided unless necessary and explained when used, because the report may be read by nontechnical users, legal counsel, management, or outside parties. Signed interview notes are not the primary reporting document. The report’s purpose is to communicate relevant investigative activities, findings, and recommendations in a clear and objective manner.

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to civil, the question asks about civil actions in most jurisdictions is CORRECT, CORRECT.

The correct answer is B: Civil actions begin with the filing of a pleading, usually in the jurisdiction where the defendant resides or where the claim originated..

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

This question tests your knowledge of Domain 3.

In the context of Bankruptcy Fraud, specifically relating to bankruptcy, bustout, the question asks about CEO, MOST LIKELY.

The correct answer is D: A concealed transfer.

This question focuses on bankruptcy fraud concepts. The correct answer correctly identifies the relevant bankruptcy process, filing type, or fraud scheme. Understanding bankruptcy proceedings and the roles of various parties is essential for fraud examiners investigating these cases.

According to the ACFE Fraud Examiners Manual, Law Section, under The Criminal Justice System and The Law Related to Fraud , obstruction of justice occurs when a person corruptly interferes with the administration of law or the proper functioning of the judicial process. This includes attempting to improperly influence, intimidate, or tamper with witnesses in a pending proceeding.

Offering money to witnesses in exchange for changing their testimony constitutes witness tampering, which is a classic form of obstruction of justice. The essence of obstruction is not merely the success of the interference but the corrupt attempt to impede the due administration of justice. The legal system depends on truthful testimony, and any effort to alter or influence witness statements through bribery undermines the integrity of judicial proceedings.

“Conspiracy to influence the court” is not a standard standalone criminal charge in this context, and fraudulent misrepresentation typically relates to deception for financial or property gain, not interference with judicial proceedings. Judicial extortion involves coercion under color of official authority, which does not apply here.

Therefore, Monique’s conduct—offering payment to alter testimony—would most likely result in additional charges for obstruction of justice because she is attempting to corruptly interfere with the criminal trial process.

Under the ACFE Fraud Examiners Manual, Law Section, specifically in the Money Laundering chapter , money services businesses MSBs are non-bank financial institutions that provide services such as currency exchange, money transmission, check cashing, issuing or selling money orders, and dealing in stored value. These entities are specifically recognized in anti-money laundering frameworks because of their exposure to cash-based and cross-border transactions.

A currency exchange clearly falls within the definition of an MSB because it engages in the exchange of one currency for another, often involving large volumes of cash transactions. Such businesses are subject to anti-money laundering compliance requirements, including customer identification procedures, recordkeeping, and reporting of suspicious transactions.

Depository institutions, including commercial or investment banks, are generally regulated as banks rather than MSBs. Furthermore, MSBs are often considered higher risk for money laundering due to the volume of cash transactions and international transfers they process. While MSBs are regulated, they do not typically have stricter regulations than full-service banks, which are subject to comprehensive prudential and AML supervision.

Therefore, the most accurate statement is that a currency exchange is classified as an MSB.

The reporting and testifying phase of a digital evidence investigation is where the examiner presents the results of the analysis fairly, objectively, and in a way that supports the reliability of the process. The purpose is not to prove guilt at all costs, but to explain what was done, what was found, and why the evidence and analysis are valid. Option B is correct because digital evidence must be presented in a manner that confirms the soundness of collection, preservation, processing, and analysis. Option A is too conclusory and improperly focuses on proving guilt. Option C is too narrow because live demonstrations are not the primary goal. Option D is educational rather than evidentiary.

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to adversarial, inquisitorial, the question asks about MOST ACCURATE, the selection of expert witnesses during trial is MOST ACCURATE.

The correct answer is B: Generally, the parties select the expert witnesses in both inquisitorial and adversarial jurisdictions..

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions. Expert witnesses provide specialized knowledge to help the fact finder understand complex issues. Their testimony must be relevant, reliable, and based on sufficient facts or data.

The correct answer is C because it is the best example of circumstantial evidence. Circumstantial evidence does not directly prove the ultimate fact in dispute. Instead, it establishes surrounding facts from which a judge or jury may reasonably infer the conclusion. Here, proof that the cashier deposited $900 into a personal bank account the day after $900 was stolen does not directly show the cashier taking the money, but it strongly suggests involvement in the theft. That is precisely how circumstantial evidence works in fraud and theft cases.

Option A is direct evidence, not circumstantial evidence, because an eyewitness claims to have actually seen the cashier remove money from the register. Option B is merely demonstrative or illustrative evidence showing store layout; by itself, it does not tend to prove that the cashier committed the theft. Option D also does not prove the act of theft; it only explains a workplace rule or standard. In fraud examinations, circumstantial evidence is often very important because many fraudulent acts occur in secret, requiring investigators to prove wrongdoing through patterns, financial links, timing, and conduct rather than direct observation alone. Therefore, C is the strongest circumstantial-evidence choice.