Which of the following is FALSE regarding the process of defining the objective of the fraud risk management program?

1. A. Management must assign a quantitative measure to its risk appetite so that it can accurately measure the fraud risk management program s effectiveness
2. B. Management should express risk appetite in a manner that is appropriate for and unique to the organization s culture and operations.
3. C. Management should examine previous fraud occurrences to determine how the ideal fraud risk management program would have prevented them.
4. D. Management must consider the total amount of fraud risk it is willing to accept when determining fraud risk management objectives

Correct Answer: D

Which of the following is NOT considered a conflict of interest that is prohibited under the ACFE Code of Professional Ethics? )

1. A. Undertaking an engagement that decreases the fraud examiner's ability to perform their duties for their full-time employer
2. B. Accepting an assignment to assess red flags of fraud at an organization in which the fraud examiner is a partner, provided the fraud examiner's ownership interest is disclosed
3. C. Undertaking engagements for both sides in a case of an alleged product substitution scheme
4. D. Accepting an assignment to secretly infiltrate the fraud examiner s employing organization and transmit inside information to another party

Correct Answer: C

Which of the following is FALSE regarding corporate governance'

1. A. Effective corporate governance practices are most necessary in an organization in which the owners are not also the individuals responsible for setting and executing the business strategy
2. B. Effective corporate governance practices are considered to be the foundation of fraud risk management.
3. C. Corporate governances primary purpose is to ensure the accuracy of the organization's financial reports
4. D. An entity's corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization.

Correct Answer: D

Which of the following statements is TRUE regarding how fraud examiners should exercise professional skepticism during a fraud examination engagement?

1. A. Professional skepticism involves maintaining a mindset that no fraud has occurred
2. B. Fraud examiners should not relax their skeptical attitudes even if there are no signs of fraudulent activity.
3. C. Fraud examiners should form the engagement hypothesis without regard to the available preliminary information
4. D. Professional skepticism means beginning all assignments with the belief that something is amiss

Correct Answer: D

An effective system of internal controls:

1. A. Decreases the perception that fraud will be detected
2. B. Focuses more on detective controls than preventive controls
3. C. Focuses more on preventive controls than detective controls
4. D. Does not completely eliminate the risk of fraud

Correct Answer: C