CFE-Fraud-Prevention-and-Deterrence Exam Dumps - Certified Fraud Examiner - Fraud Prevention and Deterrence Exam

ï‚· Criminogenic Nature of Organizations:

Research suggests that organizational culture and pressures can override an individual's personal values, especially when authority figures issue direct orders to engage in unethical behavior.

ï‚· Why B is Correct:

Strong personal values do not guarantee resistance to unethical orders, as obedience to authority is a powerful psychological force, as seen in studies like the Milgram experiment​​.

ï‚· Implication for Fraud Prevention:

Organizations must establish strong ethical environments to reduce the influence of authority pressure on employees

ï‚· ACFE Code of Professional Ethics:

Article II prohibits all illegal and unethical conduct, with no exceptions for unknowing violations of the law. CFEs are expected to maintain a high standard of professional integrity and responsibility.

ï‚· Why B is Correct:

Ignorance of the law is not an acceptable defense under the ACFE Code of Ethics. Professionals must ensure they understand and comply with applicable laws.

ï‚· References:

ACFE Code of Professional Ethics​​.

Impact of Reporting to Law Enforcement:

Reporting fraud incidents to law enforcement demonstrates a zero-tolerance approach, acting as a deterrent to potential fraudsters.

It also ensures that perpetrators face legal consequences, discouraging others from engaging in fraudulent activities.

Prevention Mechanism:

The public nature of such actions signals organizational commitment to ethics and integrity, enhancing its reputation and strengthening internal controls.

Supporting References:

ACFE guidelines advocate for reporting fraud to appropriate authorities as part of an effective fraud prevention strategy​​.

Differential Reinforcement Theory:

This theory suggests behavior is strengthened when positive rewards are gained or punishment is avoided, not weakened.

The premise is the opposite of what the statement claims.

Conclusion:The statement is incorrect because differential reinforcement strengthens, not weakens, behavior.

Integration of Fraud Risk Assessment in Audits:

The fraud risk assessment provides valuable input but does not replace the auditor’s independent responsibility to identify and assess fraud risks.

Why B is Correct:

Professional auditing standards require auditors to perform their own risk assessments, and the fraud risk assessment is only a tool to enhance this process.

Why Other Options are Correct:

A, C, and D reflect appropriate uses of fraud risk assessments in the audit process, such as increasing awareness and designing effective audit tests​​.

References for All Questions:

ACFE Code of Professional Ethics and Fraud Examination Guide​​.

COSO frameworks for corporate governance and fraud risk management​​.

Standards for incorporating fraud risk assessments into the audit process​​.

ï‚· ACFE Code of Professional Ethics:

Fraud examiners must avoid expressing opinions about guilt or innocence. They are tasked with presenting evidence and findings objectively, leaving determinations of guilt to legal or regulatory authorities.

ï‚· Why A is Correct:

Maria’s statement that "Rita is guilty" constitutes a violation because it goes beyond the role of a fraud examiner.

ï‚· References:

ACFE standards emphasize objectivity and avoidance of subjective judgments in fraud reporting​​.

ï‚· Effectiveness of Consistent Punishment:

Consistent punishment demonstrates an organization's commitment to enforcing anti-fraud policies and serves as a deterrent to potential fraudsters.

ï‚· Why A is Correct:

When perpetrators are consistently punished, it sends a strong message about zero tolerance for fraud and reinforces the importance of compliance throughout the organization.

ï‚· References:

ACFE guidance on fraud deterrence emphasizes the role of consequences in preventing fraud​​.