Fraud Prevention & Deterrence Flashcards
7 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 7 Fraud Prevention & Deterrence flashcards as text
Which internal control activity is the MOST fundamental for preventing asset misappropriation?
Answer: Segregation of duties
Segregation of duties ensures no single employee controls all aspects of a transaction, making it much harder to commit and conceal asset misappropriation.
Why is it important for organizations to publicize disciplinary actions taken against fraud perpetrators?
Answer: To reinforce deterrence by demonstrating real consequences
Publishing outcomes (appropriately and lawfully) demonstrates that fraud has real consequences, strengthening the deterrent effect on other employees.
An employee is caught submitting personal expenses on a company credit card. The manager quietly returns the money and takes no further action. What fraud prevention principle does this violate?
Answer: The principle of consistent and transparent enforcement
Handling fraud quietly without formal action violates consistent enforcement, which is essential for maintaining credible deterrence and fairness.
What is the primary goal of a fraud awareness training program?
Answer: To help employees recognize red flags and understand reporting channels
Fraud awareness training helps employees spot warning signs of fraud and know how and where to report suspicions, increasing the likelihood of early detection.
Which situation represents a classic 'opportunity' factor that enables occupational fraud?
Answer: A single employee both approves and processes vendor payments
When one employee both approves and processes payments, they have unchecked access and control, creating a clear opportunity to commit and conceal fraud.
According to the ACFE, which industry tends to have the highest frequency of occupational fraud cases?
Answer: Banking and financial services
Banking and financial services organizations are frequently the most-reported industry in ACFE fraud studies due to the high volume and liquidity of assets handled.
A company conducts an annual 'fraud risk workshop' with department heads to identify emerging schemes. This practice BEST exemplifies which step in fraud risk management?
Answer: Ongoing fraud risk assessment
Regularly convening stakeholders to identify new fraud risks is an example of ongoing, proactive fraud risk assessment embedded in normal business operations.