Practice Test Geeks(ACFE) Association of Certified Fraud Examiners Practice Test
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Auditing and Internal Controls Flashcards

6 cards from real ACFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Auditing and Internal Controls flashcards as text

  1. Under the Sarbanes-Oxley Act (SOX) Section 404, who is responsible for assessing the effectiveness of internal controls over financial reporting?

    Answer: Management and the external auditor

    SOX Section 404 requires both management to assess and report on internal controls over financial reporting and the external auditor to attest to that assessment.

  2. Which auditing standard requires external auditors to assess the risk of material misstatement due to fraud in every audit?

    Answer: AU-C Section 240 / ISA 240

    AU-C 240 (US GAAS) and ISA 240 (international) require auditors to specifically consider and assess the risk of material misstatement arising from fraud in every financial statement audit.

  3. A 'compensating control' is best described as:

    Answer: A control that mitigates risk when the primary control cannot be implemented

    A compensating control is an alternative control that reduces risk to an acceptable level when the ideal primary control—such as segregation of duties—cannot be practically implemented.

  4. Which of the following best describes the purpose of a 'surprise audit' in a fraud prevention program?

    Answer: To deter fraud by introducing the unpredictability of detection

    Surprise audits deter fraud by removing the predictability that allows fraudsters to conceal their schemes before a scheduled audit.

  5. The 'fraud triangle,' as described in the ACFE's guidance, consists of which three elements?

    Answer: Pressure, opportunity, and rationalization

    The fraud triangle identifies three conditions that are typically present when fraud occurs: perceived pressure (incentive/need), perceived opportunity, and the ability to rationalize the act.

  6. Which internal control procedure is most effective at detecting duplicate payments to vendors?

    Answer: Running automated data analytics to match invoice numbers, amounts, and vendor IDs

    Automated matching of invoice numbers, amounts, and vendor identifiers quickly flags duplicate submissions that might otherwise slip through manual review.