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

ï‚· ACFE Code of Professional Ethics:

CFEs must not make definitive statements about the absence of fraud, as such statements can mislead stakeholders and compromise professional integrity.

ï‚· Why A is Correct:

Jane cannot state the company is "free of fraud" because no examination can guarantee the complete absence of fraud, only that no evidence was found based on the scope of work.

ï‚· References:

ACFE ethical guidelines on reporting and assurance practices​​.

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.

ï‚· Professional Auditing Standards Requirement:

Standards such as the International Standards on Auditing (ISA) and Generally Accepted Auditing Standards (GAAS) require auditors to include elements of unpredictability in their audit procedures to reduce the risk of fraud.

ï‚· Purpose of Unpredictability:

By varying the scope, timing, and extent of audits, auditors prevent potential fraudsters from anticipating audit procedures and adjusting their behavior.

ï‚· Why A is Correct:

This aligns with established auditing principles to enhance fraud detection and maintain audit integrity​​.

Comprehensive and Detailed in Depth Explanation:

Government auditors typically cannot unilaterally withdraw from an audit engagement, even in cases where fraud is identified. Public-sector audits often follow mandates from higher authorities or statutes that require the auditor to continue and report findings to oversight bodies. Additionally, fraud and abuse (including misconduct and misuse of assets) are relevant to government audits under ISSAIs, contrary to A and B. Option D is incorrect because public-sector audit objectives are often broader, encompassing compliance, performance, and integrity aspects.

McCaghy's Perspective on Organizational Deviance:Criminologist Charles McCaghy identified regulatory pressure as a significant factor influencing organizational deviance. Excessive or poorly implemented regulations can lead companies to cut corners or engage in fraudulent behavior to remain competitive.

Supporting Analysis:

Regulatory pressure can create a perception that compliance is too costly or burdensome, leading to unethical practices.

This aligns with the concept of "strain theory," where organizations under pressure may resort to deviance.

Conclusion:McCaghy's assertion that regulatory pressure is a key driver of organizational deviance is accurate.

Diane Vaughan’s Research:

Vaughan highlights that linking employee performance goals with company goals can create undue pressure, fostering an environment where unethical behavior becomes rationalized.

Analysis of Other Options:

A. Diversity in hiring:Encourages broader perspectives and does not inherently lead to crime.

B. Rewarding challenges to the status quo:Promotes innovation and integrity, reducing crime risk.

Conclusion:Management’s linking of performance goals with company goals is the factor most associated with increased crime inclination.

Impartiality in Fraud Risk Assessment:

As the lead on the fraud risk assessment, Glenda must maintain objectivity and avoid the appearance of bias.

Her history of disagreements with Bridgette creates a potential conflict of interest, which could compromise the assessment's credibility.

Why Option D is Correct:

Assigning the accounts receivable department's assessment to another individual eliminates the risk of perceived or actual bias.

Analysis of Other Options:

A. Confrontation:Not appropriate during a professional assessment.

B. Including disagreements:Personal conflicts should not influence risk evaluations.

C. Automatic high-risk designation:This lacks a factual basis and undermines objectivity.

Conclusion:Option D ensures objectivity and credibility in the fraud risk assessment.