CFE-Fraud-Prevention-and-Deterrence Practice Exam Questions and Answers

A.  

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement

B.  

The auditors should assess the need to adjust the nature, timing, and extent of remaining audit procedures based on this evidence.

C.  

The auditors can ignore the misstatement because the omitted amount is less than the quantitative materiality threshold and therefore immaterial to the audit.

D.  

The auditors do not need to be concerned with this evidence, as asset misappropriation schemes are not considered relevant or material for external audit purposes.

A.  

A salesman offering bribes to secure a contract

B.  

An accounting clerk forging company checks to herself

C.  

A doctor conspiring with patients to Tile false health care insurance claims

D.  

Management of several construction companies engaging In bid rigging

A.  

Tell White that she will try to keep the information as confidential as possible

B.  

Agree that the information will be held in confidence, even though Blue knows it will not be

C.  

Take White's request straight to ABC Corp.'s management

D.  

Not agree to the request for confidentiality

A.  

It should be used to assess whether there is a moderate-to-high risk of management overriding controls within the moderate-to-high fraud risk areas.

B.  

It should be used to replace the auditor's own identification and assessment of fraud risks.

C.  

it should be used to increase awareness in the development of audit programs for areas that have been identified as having a moderate-to-high risk of fraud.

D.  

It should be used to design audit tests to evaluate whether the controls are operating effectively.

A.  

Tell the nonprofit's board of trustees about Charles

B.  

Report Charles to law enforcement

C.  

Not disclose the information about Charles.

D.  

Resign from the engagement.

A.  

Operational risk assessment

B.  

Internal control

C.  

Fraud risk management

D.  

Financial reporting

A.  

The auditors should reconsider the reliability of the audit evidence they have previously obtained.

B.  

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement.

C.  

The auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.

D.  

The auditors should regard the misstatement as immatenal to the audit because the omitted amount is less than the quantitative materiality threshold

A.  

Confront Bridgette about the disagreements and discuss how they increase the department's risk of fraud.

B.  

Include her disagreements with Bridgette as a factor when assessing the risk of fraud in the accounts receivable department.

C.  

Automatically designate the accounts receivable department as a high-risk area.

D.  

Have someone else perform the fraud risk assessment work related to the accounts receivable department's activities.

A.  

Give shareholders oversight of hotline reporting programs

B.  

Have adequate compensation committee resources and authority

C.  

Develop a written charter for management

D.  

Have a mandatory independent audit committee

A.  

Use a checklist of initiatives to make sure all the elements of a strong tone at the lop are in place

B.  

Create an environment in which employees are dissuaded from challenging management's decisions

C.  

Visibly adhere to the same set of ethics policies that is required of all employees

D.  

All of the above