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Employee anti-fraud education should:

A.

Include descriptions of the procedures that management uses to detect fraud.

B.

Include examples of prior employee misconduct and how those situations were handled.

C.

Be restricted to formal educational mechanisms to reinforce the importance of the message.

D.

Be presented by organizational executives or anti-fraud professionals only.

Gregory, an internal auditor, and Brandon, the company ' s purchasing manager, have had several heated disagreements over purchasing procedures and policies. Gregory has just been told that he will be the lead on the company ' s fraud risk assessment. During the fraud risk assessment. Gregory should:

A.

Confront Brandon about the disagreements and discuss how they increase the organization ' s risk of fraud-

B.

Have someone else perform the fraud risk assessment work related to the purchasing function

C.

Include his disagreements with Brandon as a factor when assessing the risk of fraud in the purchasing function.

D.

Automatically designate the purchasing function as a high-risk area.

During an external audit, the audit team identifies evidence that management has intentionally omitted some expenses from the company ' s financial statements in order to conceal an asset misappropriation scheme. However, the amount of the resulting misstatement does not meet the quantitative materiality threshold for the audit. Which of the following is TRUE regarding this situation?

A.

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement

B.

The auditors should assess the need to adjust the nature, timing, and extent of remaining audit procedures based on this evidence.

C.

The auditors can ignore the misstatement because the omitted amount is less than the quantitative materiality threshold and therefore immaterial to the audit.

D.

The auditors do not need to be concerned with this evidence, as asset misappropriation schemes are not considered relevant or material for external audit purposes.

Jane, a Certified Fraud Examiner (CFE), was hired lo conduct a fraud examination at XYZ Company Her examination did not reveal any conclusive evidence that fraud had occurred or was occurring Consequently. XYZ ' s management asked Jane to state in her official examination report that the company is free of fraud as a means of assuring the board of directors that the company ' s anti-fraud controls were effective. The ACFE Code of Professional Ethics prohibits Jane from complying with management ' s request.

A.

True

B.

False

Which of the following Is TRUE regarding an organization ' s ethics program?

A.

To be most effective, access to the organization ' s ethics policy should be restricted to employees and other Internal parties only

B.

In designing the ethics program, management should consider whether the organization currently has any ethical leadership Issues

C.

An effective written ethics policy alone is sufficient to communicate management ' s ethical philosophy and serve as a comprehensive ethics program

D.

All of the above

Which of the following is a best practice when assembling a fraud risk assessment team?

A.

Team members should all have similar skills and perspectives.

B.

The size of the team should be limited to four individuals.

C.

The team should include only external sources.

D.

Team members should have experience in eliciting information.

Which of the following scenarios would MOST LIKELY be considered a violation of the ACFE Code of Professional Ethics?

A.

Riva, a CFE, uncovered material internal control deficiencies that were material but unrelated to the kickback scheme she was investigating. In her final report to management, Riva included information about the deficiencies despite their being unrelated to the situation she was hired to investigate.

B.

Dee, a CFE, accepted an assignment to conduct a fraud examination within a manufacturing company. Because she rushed to complete the investigation, she overlooked key items of evidence and failed to uncover a fraud scheme.

C.

Derrick, a CFE, was hired by a client to conduct a fraud examination but found nothing abnormal. A year later, he received a court order to provide the client ' s file to the court. Derrick complied with the court order despite not having the client ' s authorization to provide the file.

D.

All of the above are violations.

Employees should be kept unaware that management is watching for lifestyle and behavior changes In staff members that might indicate fraud.

A.

True

B.

False

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.

Reputational damage is an indirect cost of fraud that can be difficult for organizations to calculate.

A.

True

B.

False