ACFE Updated CFE-Fraud-Prevention-and-Deterrence Exam Questions and Answers by kyla

The Fraud Risk Assessment chapter stresses that the people leading and conducting the fraud risk assessment must be independent and objective. The manual specifically warns that personal experiences or biases can improperly affect a team member’s evaluation of fraud risks in a business area. It gives an example that if a team member had a bad experience with someone in a department, someone else should perform the fraud risk assessment work for that area to avoid bias. That guidance directly applies here. Because Jacques has had multiple disagreements with Brenna, his objectivity regarding the travel and expense function could reasonably be impaired or questioned. Therefore, to preserve the integrity of the assessment process, he should request that another person perform the fraud risk assessment work related to employee travel and expenses.

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The ACFE Code of Professional Ethics requires CFEs to act with integrity, competence, and professionalism. It specifically prohibits illegal or unethical conduct, as such conduct discredits the profession and undermines public confidence in fraud examination work. A CFE may provide conclusions based on evidence, provided those conclusions are supported by relevant, reliable, and sufficient facts. A CFE may also give opinions on technical matters, such as internal controls, when qualified to do so. Conflicts of interest require careful handling and disclosure, but the most clearly and explicitly prohibited action in the options is participating in conduct that could be considered unethical. This violates the ethical foundation expected of fraud examiners and threatens the credibility of the examination. Therefore, option C is correct.

ACFE research indicates that asset misappropriation schemes, such as theft of cash or inventory, are the most common type of occupational fraud. While they are frequent, they typically result in lower financial losses compared to corruption or financial statement fraud, which are less common but can cause greater financial damage.