Fraud Risk Assessment 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 Risk Assessment flashcards as text
Which type of fraud scheme is most directly mitigated by implementing a mandatory vacation policy for employees in sensitive positions?
Answer: Skimming and lapping schemes
Mandatory vacations force others to cover an employee's duties, which can expose ongoing skimming or lapping schemes that require constant maintenance.
During a fraud risk assessment, which of the following would be considered an 'anti-fraud control' rather than a fraud risk?
Answer: Mandatory ethics training for all employees
Mandatory ethics training is an anti-fraud control designed to reduce rationalization and deter fraudulent behavior, not a risk factor.
An organization wants to assess fraud risks in its procurement process. Which approach provides the most direct insight into potential fraud schemes?
Answer: Mapping procurement process flows to identify control gaps and scheme opportunities
Process mapping identifies where assets change hands and where controls may be absent, directly revealing where fraud schemes could occur.
The ACFE's Fraud Risk Management Guide recommends that fraud risk assessments be conducted by whom?
Answer: A cross-functional team that includes management, internal audit, legal, and compliance
The ACFE guide recommends a multidisciplinary team to capture diverse perspectives on fraud risks across all organizational functions.
When assessing fraud risk related to financial reporting, which of the following revenue recognition scenarios represents the highest fraud risk?
Answer: Revenue from long-term contracts recognized using percentage-of-completion estimates
Percentage-of-completion accounting requires significant management estimates, creating opportunity to manipulate reported revenue and earnings.
Which of the following best describes a 'fraud risk scenario' as used in a formal fraud risk assessment?
Answer: A specific, plausible description of how a fraud scheme could be perpetrated in the organization
A fraud risk scenario is a concrete, organization-specific description of how a particular fraud scheme could be carried out given the entity's people, processes, and systems.
A company's fraud risk assessment identifies a risk of bid rigging in its procurement department. Which control would MOST directly address this risk?
Answer: Implementing a blind bidding process with independent bid committee review
A blind bidding process with independent review prevents procurement staff from influencing bid outcomes, directly addressing bid rigging risk.