Ethics For Fraud Examiners

Question 1

In the context of a fraud examination, a mindset of professional skepticism means:

A. Fraud examiners should always begin their assignments with the belief that something is wrong
B. The fraud examiner’s professional skepticism can be dispelled only by evidence
C. Fraud examiners should relax their attitude of skepticism only when the evidence shows no signs of fraud
D. All of the above

Answer 1

D. All of the above

Question 2

In reporting the results of a fraud examination, a fraud examiner is required to disclose any information that, if not disclosed, would change a user’s perceptions and conclusions.

A. True
B. False

Answer 2

True

Question 3

If a fraud examiner makes a mistake in judgment, they should avoid admitting to the error, as it could compromise the integrity of their case.

A. True
B. False

Answer 3

False

Question 4

Under the ACFE Code of Professional Ethics, fraud examiners are absolutely prohibited from expressing opinions regarding the guilt or innocence of any party.

A. True
B. False

Answer 4

True

Question 5

Under the ACFE Code of Professional Ethics, fraud examiners are strictly prohibited from expressing opinions on technical matters.

A. True
B. False

Answer 5

False

Question 6

In the context of a fraud examination, integrity requires:

A. Independence of mental attitude and avoidance of conflicts of interest
B. A well-developed moral philosophy and the ability to determine right from wrong
C. Prioritizing the interests of clients, employers, and the public over desires for personal gain
D. All of the above
Submit

Answer 6

D. All of the above

Question 7

During a fraud examination, Omar, an employee of XYZ Inc., approaches Maryam, a Certified Fraud Examiner (CFE) and fellow employee of XYZ, and tells her that he knows of a major fraud being committed by company management. However, Omar says he can only provide details if Maryam promises him absolute confidentiality. In response to Omar’s condition, Maryam should agree to keep the source of the information confidential even though she knows she will eventually have to reveal Omar’s identity.

A. True
B. False

Answer 7

False

Question 8

Leo, a Certified Fraud Examiner (CFE), conducted a fraud examination at Blue Corp. Anna was a prime suspect in the disappearance of money, but Leo could not prove it. Later, Leo discovered Anna had been recently hired by Red Corp., another client of his. Under the ACFE Code of Professional Ethics, Leo must:

A. Not inform Red Corp.
B. Inform Red Corp.
C. Inform Red Corp. if the evidence is clear and convincing
D. None of the above

Answer 8

A. Not inform Red Corp.

Question 9

In general, the lowest level of reference for making moral decisions is:

A. Philosophical principles
B. Individual standards
C. The law
D. None of the above

Answer 9

C. The law

Question 10

Fraud examiners should consider the nature of the assignment and the preliminary information that is available when forming the engagement hypothesis.

A. True
B. False

Answer 10

True

Question 11

During a fraud examination, John, a Certified Fraud Examiner (CFE), becomes aware of a situation that might appear as though he has a conflict of interest even though there is no actual conflict. To address the situation, John’s BEST course of action is to:

A. Immediately withdraw from the engagement without disclosing the potential conflict to management
B. Immediately disclose the situation to company management
C. Continue working on the assignment without disclosing the potential conflict but take care to avoid any areas where an actual conflict might arise
D. None of the above

Answer 11

B. Immediately disclose the situation to company management

Question 12

Under the ACFE Code of Professional Ethics, evidence and conclusions are considered ___________ if knowledge of them would affect clients’ decisions based on a fraud examiner’s report.

A. Circumstantial
B. Confidential
C. Reliable
D. Material

Answer 12

D. Material

Question 13

Which of the following statements is TRUE regarding the disclosure of confidential client information?

A. Confidential information provided to a fraud examiner by a client is considered privileged and therefore legally exempt from disclosure in all circumstances.
B. A fraud examiner is always bound by confidentiality, even when refusing to disclose information violates the law.
C. A fraud examiner can reveal confidential client information when responding to a legal court order.
D. A fraud examiner is only allowed to respond to a legal court order when their client grants them authorization to do so.

Answer 13

C. A fraud examiner can reveal confidential client information when responding to a legal court order.

Question 14

Justine, a Certified Fraud Examiner (CFE), was contacted regarding an engagement to investigate a complex insurance fraud case involving an organized crime ring. Justine had previously taken a self-study continuing professional education (CPE) course on insurance fraud schemes, but she had no other training or experience. However, she accepted the engagement and chose to conduct the work herself. Justine’s conduct would likely be a violation of the ACFE Code of Professional Ethics.

A. True
B. False

Answer 14

True

Question 15

Under the ACFE Code of Professional Ethics, fraud examiners are strictly prohibited from revealing confidential client information under any circumstances.

A. True
B. False

Answer 15

False

Question 16

The ACFE Code of Professional Ethics prohibits fraud examiners from engaging in undisclosed conflicts of interest. To ensure compliance with this rule, which of the following situations should a fraud examiner avoid?

A. A fraud examiner should avoid undertaking an engagement to infiltrate their employer and transmit inside information to another party
B. A fraud examiner should avoid undertaking engagements that create a hardship or loss to their primary employer
C. A fraud examiner should avoid undertaking engagements for both sides to a particular controversy or issue
D. All of the above

Answer 16

D. All of the above

Question 17

Which of the following is an example of a violation of the ACFE Code of Professional Ethics’ requirement for diligent, professional behavior?

A. Obtaining more evidence than the minimum amount needed to prove a case
B. Delegating a task to a lower-level employee and supervising their performance
C. Ignoring vital investigation steps to improve the efficiency of a fraud examination
D. All of the above

Answer 17

C. Ignoring vital investigation steps to improve the efficiency of a fraud examination

Question 18

Rachel, an independent Certified Fraud Examiner (CFE), was hired by Laura, the chief executive officer (CEO) of Black and White Inc., to investigate a case of alleged vendor overbilling. During the investigation, Rachel learns that Laura is involved in an unrelated fraud scheme. Under the ACFE Code of Professional Ethics, Rachel should resign from the engagement without disclosing the evidence against Laura.

A. True
B. False

Answer 18

False

Question 19

To be in compliance with the ACFE Code of Professional Ethics, fraud examiners must have an expert level of skill and knowledge for every circumstance that might be encountered in a fraud examination.

A. True
B. False

Answer 19

False

Question 20

Professional organizations, such as the ACFE, have codes of ethics because:

A. They facilitate practical enforcement and internal discipline throughout a profession
B. They serve as a reference and benchmark for ethical guidance
C. They provide more direct solutions to professional ethical dilemmas than might exist under general ethical principles
D. All of the above

Answer 20

D. All of the above

Question 21

In the context of a fraud examination, the preservation of integrity requires that the fraud examiner avoid all differences of opinion regarding all material matters with the other parties to the engagement.

A. True
B. False

Answer 21

False

Question 22

The ACFE Code of Professional Ethics explicitly prohibits which of the following?

A. Undisclosed conflicts of interest
B. Unethical conduct
C. Illegal conduct
D. All of the above

Answer 22

D. All of the above

Question 23

As part of their responsibilities under the ACFE Code of Professional Ethics, in collecting evidence, fraud examiners must:

A. Ensure that all necessary evidence is obtained
B. Obtain and document evidence such that the chain of custody is preserved
C. Preserve the integrity of relevant evidence
D. All of the above

Answer 23

D. All of the above

Question 24

Luna, a Certified Fraud Examiner (CFE), was hired to investigate a company. After she carefully examined the company, she issued a report that stated, in part, “In my opinion, this operation is free of material fraud.” Such an opinion is permitted under the ACFE Code of Professional Ethics.

A. True
B. False

Answer 24

False

Question 25

Under the ACFE Code of Professional Ethics, fraud examiners are strictly prohibited from accepting assignments to uncover fraud in a company in which they have a major interest.

A. True
B. False

Answer 25

False

Question 26

Failing to properly supervise all assistants and others who are delegated work on a fraud examination engagement is a violation of the ACFE Code of Professional Ethics.

A. True
B. False

Answer 26

True

Question 27

During an admission-seeking interview of a fraud suspect, Gary, a Certified Fraud Examiner (CFE), accuses the suspect of having committed a fraud. Gary’s accusation violates the ACFE Code of Professional Ethics.

A. True
B. False

Answer 27

False

Question 28

Under the ACFE Code of Professional Ethics, information provided to a fraud examiner by a client is considered privileged information and is therefore protected from being legally demanded by outside parties.

A. True
B. False

Answer 28

False

Question 29

Bryan, a Certified Fraud Examiner (CFE), locks the door to the interview room and refuses to allow the fraud suspect to leave despite repeated requests. Later, the suspect sues (successfully), claiming false imprisonment. Which of the following statements is TRUE?

A. This conduct would be a violation of the ACFE Code of Professional Ethics.
B. This conduct would not be a violation of the ACFE Code of Professional Ethics under any circumstances.
C. This conduct would be a violation of the ACFE Code of Professional Ethics only if Bryan knew the conduct was illegal.
D. This conduct would be a violation of the ACFE Code of Professional Ethics only if the suspect was innocent of fraud.

Answer 29

A. This conduct would be a violation of the ACFE Code of Professional Ethics.

Question 30

Generally, fraud examiners are NOT entitled to claim ignorance of the law as a defense for illegal activity.

A. True
B. False

Answer 30

True

Question 31

Ayumi has just completed a fraud examination report containing confidential information for ABC Inc., a client. She received a call from the local police requesting a copy of the report. Which of the following statements is FALSE?

A. Ayumi can turn over the report without any repercussions because she owns the information contained in the document.
B. Ayumi can turn over the report if it is demanded by a court order.
C. Ayumi can turn over the report if her client consents.
D. Ayumi can turn over the report if the information is requested in a search warrant.

Answer 31

A. Ayumi can turn over the report without any repercussions because she owns the information contained in the document.

Question 32

Which of the following is a fraud examiner permitted to express an opinion regarding?

A. The effectiveness of an organization’s internal controls
B. The guilt of a particular individual
C. The innocence of a particular individual
D. None of the above

Answer 32

A. The effectiveness of an organization’s internal controls