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

ï‚· ISSAI Standards:

The International Standards of Supreme Audit Institutions (ISSAI) require government auditors to consider fraud and abuse during financial audits. Abuse includes improper use of authority or resources, which may not always meet the legal threshold of fraud but still warrants attention.

ï‚· Expanded Audit Scope:

Unlike private-sector audits, public-sector audits often have broader objectives, requiring vigilance for misuse of public funds and resources.

ï‚· Why A is Correct:

Staying alert to abuse ensures comprehensive accountability, aligning with ISSAI's objectives​​.

ï‚· Purpose of Fraud Risk Assessment:

Fraud risk assessment aims to identify vulnerabilities and evaluate the organization's exposure to fraud risks. It does not specifically provide an estimate of fraud losses.

ï‚· Why D is Correct:

Estimating fraud losses is not a standard objective of fraud risk assessments; rather, they focus on identifying and mitigating risks.

ï‚· Why Other Options are Correct:

A: Employee behavior is a critical factor in fraud risk.

B: Fraud awareness is a key outcome of the assessment.

C: High-risk designations indicate vulnerability, not confirmed fraud​​.

Importance of Hiring Ethical Individuals:

Ethical hiring practices are foundational to an effective compliance program. Employees with a high measure of discretion can significantly impact organizational behavior and risk.

Pre-hiring background checks, ethical screening, and thorough interviews help mitigate the risk of unethical behavior.

Conclusion:For a compliance program to be effective, management must ensure ethical hiring practices.

Fraud Prevention Through Performance Management:Performance measurement and management programs can play a role in preventing fraud by ensuring accountability, setting ethical expectations, and reinforcing organizational goals.

Analysis of Options:

A. Ethics-based metrics:Encourages accountability and reduces fraud risks.

B. Regular training:Ensures employees are competent, reducing errors and opportunities for fraud.

D. Reasonable performance goals:Prevents pressure to commit fraud by setting realistic benchmarks.

C. Loosely defined job descriptions:This creates ambiguity, reduces accountability, and increases the risk of fraud, making it ineffective.

Conclusion:Option C is not an effective way to prevent fraud.

ï‚· Theory of Differential Association:

This theory suggests that criminal behavior is learned through interaction with others, primarily within intimate groups.

Principles of the theory include:

Learning through communication.

Acquiring criminal knowledge similarly to other forms of learning.

ï‚· Why A is Incorrect:

General needs and values, such as poverty or desire for wealth, do not directly explain criminal behavior under this theory. Instead, the behavior is attributed to learned influences from others.

ï‚· Clarification of Other Options:

B, C, and D accurately reflect the principles of differential association​​.

Understanding the ACFE Code of Professional Ethics:The ACFE Code of Professional Ethics requires Certified Fraud Examiners to demonstrate competence and due care in their professional services. Specifically:

Rule 2 states that CFEs must "perform all professional engagements with due diligence."

Rule 4 emphasizes that CFEs must "avoid conduct that discredits the profession or the Association."

Competence and Due Care:

Benjamin, despite his attendance at a seminar on money laundering, lacks the requisite expertise or experience in investigating complex money laundering cases. Accepting an engagement of this nature without possessing adequate training, knowledge, or resources indicates a failure to exercise due care.

The Code emphasizes the importance of competence, meaning professionals must decline engagements that exceed their expertise unless they involve qualified individuals or teams.

Violation Assessment:

By choosing to conduct the investigation alone, Benjamin disregards the ethical requirement to ensure competence and quality in professional work. This likely jeopardizes the investigation's integrity and results.

This conduct could lead to suboptimal outcomes, legal liabilities, and reputational harm, which discredit the profession, violating the ACFE ethical framework.

Conclusion:Benjamin's decision is a breach of the ACFE Code of Professional Ethics because he failed to ensure adequate preparation, skills, and resources for the engagement.