Pass the ACFE Certified Fraud Examiner CFE-Fraud-Prevention-and-Deterrence Questions and answers with Dumpstech

In the White-Collar Crime chapter, the manual’s discussion of Crimes of the Middle Classes identifies several factors contributing to the rising problem of economic crime. One of the specific factors mentioned is that the economy increasingly runs on credit, which often leads to rising personal debt. The manual notes that offenders frequently showed serious discrepancies between their resources and their commitments, and it further explains that the easy availability of money and goods on credit can fuel fraud schemes. This directly supports option B. The other answer choices do not reflect the factors listed in the manual. Therefore, the correct answer is the economy’s increased reliance on credit.

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Scope of Fraud Risk Assessment:

The fraud risk assessment team must consider various factors, including:

A. Incentive programs:Can create pressures that lead to fraud.

B. Management override of controls:A key risk for fraud occurring despite existing safeguards.

C. Risks to reputation:Fraud incidents can harm the organization ' s public image.

Comprehensive Discussion:

Considering all these factors ensures a thorough identification of inherent fraud risks.

Conclusion:The fraud risk assessment team should discuss all listed items.

The ACFE Code of Professional Ethics prohibits a fraud examiner from expressing an opinion regarding the guilt or innocence of any person or party. However, the manual clearly distinguishes prohibited opinions on guilt from permissible opinions on technical matters. It explains that fraud examiners may draw reasonable conclusions supported by evidence and, if qualified, may offer opinions regarding technical matters such as the relative adequacy of an entity’s internal controls. Therefore, Black is not barred from discussing control deficiencies merely because he did not uncover fraud. As long as his opinion is within his expertise and has a reasonable evidential basis, including it in a report to management is ethically acceptable. For this reason, the option stating that he may express the opinion because it concerns a technical matter is correct.

Steve Albrecht ' s Research on Fraud Motivation:

Personal factors like " living beyond their means " are commonly cited as a driver of fraudulent behavior.

Organizational factors, such as excessive trust in key employees, create opportunities for fraud by reducing oversight and enabling unethical behavior.

Analysis of Options:

A. High personal debt:This can be a motivator, but it is less common than " living beyond their means. "

B. Revenge:Rarely a primary driver of fraud.

D. Desire for recognition:This may motivate some individuals, but it is not as prevalent as financial pressure and opportunity.

Conclusion:Option C reflects the most common personal and organizational factors motivating fraudsters.

 Due Diligence in High-Corruption Risk Transactions:

When operating in high-risk environments, enhanced due diligence is critical. This includes evaluating payment methods, transaction patterns, and the customer ' s reputation.

 Why A is Correct:

Analyzing purchasing patterns and payment methods helps identify red flags such as unusual payment terms or volumes inconsistent with Green’s business profile.

 Why Other Options are Incorrect:

B: Due diligence is necessary regardless of payment terms.

C: Enhanced due diligence for high-risk countries does not constitute discrimination.

D: Ignoring due diligence poses significant compliance and reputational risks.

 References:

ACFE guidance on due diligence and anti-corruption practices in global commerce​​.

A clearly defined organizational structure contributes to accountability and reduces fraud risks. According to the ACFE manual:

“An effectively documented and communicated structure helps prevent fraud by providing clear lines of authority and responsibility and ensuring appropriate oversight.”

Reinforcing an Anti-Fraud Culture:A strong ethical tone at the top is crucial to reducing fraud risk. Employees must feel empowered to report concerns without fear of retaliation.

Analysis of Options:

A. Using a checklist:While useful, it is not sufficient alone to instill an anti-fraud culture.

C. Separate ethics policies:A unified ethical standard for all employees fosters trust and consistency.

B. Safe environment for challenges:This is the most effective method as it promotes transparency, accountability, and whistleblowing.

Conclusion:Creating a safe and open environment for employees to challenge management ' s decisions is the most impactful action.

Understanding Behaviorism and Punishment:

Behaviorists like B. F. Skinner argue that punishment temporarily suppresses undesired behaviors rather than eliminating them.

Once the punitive stimulus is removed, the behavior is likely to reappear unless it is replaced with a more desirable behavior through reinforcement.

Analysis of Options:

B. Permanently suppressed:This contradicts the principles of behaviorism, as punishment alone does not permanently modify behavior.

C. Occur more frequently:Punishment typically decreases behavior temporarily.

D. Not affected by punishment:Punishment impacts behavior, but the effect is often temporary.

Conclusion:The most likely outcome is that the behavior will return once the punishment ceases.

Employee background checks are considered a preventive control because they are designed to identify potentially risky hires before employment. The manual states that “background checks are a front-line preventive measure in combating fraud by screening out individuals who pose higher risk.”