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NEW QUESTION # 109
According to criminologist Charles McCaghy, which of the following is the most compelling factor behind deviance by organizations?

• A. Profit pressure
• B. Excessive regulatory requirements
• C. Executive failures
• D. Unethical corporate culture

Answer: A

NEW QUESTION # 110
A fraud risk assessment identifies a scheme that has a low likelihood of occurrence but would cause catastrophic financial and reputational damage. How should the organization treat this risk?

• A. Evaluate both likelihood and impact when determining mitigation priorities
• B. Focus only on frequent fraud risks
• C. Remove it from the assessment
• D. Ignore it because likelihood is low

Answer: A

Explanation:
Fraud risk assessments should consider both probability and potential impact. Some events occur rarely but can threaten the organization's financial stability, reputation, or regulatory standing. These risks often justify significant preventive and detective controls despite their low likelihood.

NEW QUESTION # 111
Which of the following statements is TRUE according to rational choice theory?

• A. Crime originates from the application of excessive pressure and influence on the perpetrator by external sources.
• B. Crime originates from a rational and conscious decision made by the perpetrator in order to receive an intended benefit.
• C. Crime can be deterred by increasing the potential for financial gain for the perpetrator.
• D. Crime can be deterred by decreasing the personal risk to potential perpetrators.

Answer: B

Explanation:
Rational choice theory posits that criminal behavior is a result of deliberate decision-making.
According to the ACFE manual:
"Rational choice theory assumes that individuals weigh the expected benefits of committing a crime against the possible consequences. If the perceived benefits outweigh the perceived risks, the individual may choose to offend."

NEW QUESTION # 112
According to Silk and Vogel's research, which of the following is one of the ways that businesses rationalize illegal conduct?

• A. Corporate violations that involve large sums of money are often spread among so many organizations that each gains very little individually.
• B. Government regulations are justified because the additional costs of regulations and bureaucratic procedures increase government profits.
• C. Violations are caused by innocent errors in judgment rather than economic necessity.
• D. Government regulation is unnecessary because the matters being regulated are unimportant.

Answer: A

Explanation:
Silk and Vogel's research found that organizations often rationalize unethical or illegal behavior by diffusing responsibility across a group, thus minimizing perceived individual culpability.
This"shared guilt" justification is reflected in option D. The other options either misunderstand the research or do not reflect actual rationalizations used in white-collar crime contexts.

NEW QUESTION # 113
According to Diane Vaughan. which of the following factors increases an organization's inherent inclination toward committing crime?

• A. All of the above
• B. Rewards are given to employees who challenge the status quo
• C. Management encourages employee loyalty through social functions
• D. Management separates employee performance goals from company performance goals

Answer: D

Explanation:
Diane Vaughan's Theory on Organizational Crime:
Vaughan argued that organizational environments prone to crime exhibit a "normalization of deviance," often influenced by management decisions that misalign employee incentives with organizational objectives.
Why C is Correct:
Misaligned goals create conflicting priorities, increasing the likelihood of unethical behavior to meet individual or team objectives.

NEW QUESTION # 114
Which of the following is NOT included in G20/OECD Principles of Corporate Governance (the Principles)?

• A. Guidance regarding appropriate board structures, responsibilities, and procedures
• B. A request that governments have in place an appropriate framework to support good corporate governance practices
• C. Recognition of the importance of the role of stakeholders in corporate governance
• D. Support for establishing stronger protection for foreign shareholders than for domestic shareholders

Answer: D

Explanation:
Understanding G20/OECD Principles of Corporate Governance:These principles provide a framework to improve corporate governance worldwide. Key elements include board responsibilities, shareholder rights, equitable treatment, and stakeholder roles.

NEW QUESTION # 115
Management at ABC Corp. is assessing the company's ethical tone and how it affects the organization's fraud risk. To MOST EFFECTIVELY reinforce an anti-fraud culture, management should:

• A. All of the above
• B. Visibly adhere to the same set of ethics policies that is required of all employees
• C. Use a checklist of initiatives to make sure all the elements of a strong tone at the lop are in place
• D. Create an environment in which employees are dissuaded from challenging management's decisions

Answer: B

Explanation:
Management must set a strong example by adhering to the same ethical standards as employees.
Visible adherence builds trust and reinforces an anti-fraud culture.

NEW QUESTION # 116
According to ACFE research, which of the following is TRUE regarding prosecutions of white- collar criminals?

• A. The most common internal response to a substantiated fraud case is to terminate the employee.
• B. The primary reason that organizations decline to prosecute fraud cases is a lack of evidence.
• C. Most fraud cases are only handled internally and are not referred to law enforcement for prosecution.
• D. Only a small percentage of perpetrators are punished when an organization handles a fraud case internally.

Answer: A

Explanation:
The ACFE has found that terminating the employee involved in fraud is the most common internal response to substantiated cases. While many fraud cases are handled internally without being referred to law enforcement, this is often due to concerns such as reputational damage or cost considerations rather than a lack of evidence.

NEW QUESTION # 117
Adan, an internal auditor who works at BKY Co., is reviewing the auditing procedures for his company. He is specifically considering the ways BKY can proactively audit for fraud. Which of the following is TRUE regarding the use of proactive fraud auditing procedures at BKY?

• A. Fraud assessment questioning techniques are most effectively used as part of the normal audit process.
• B. Analytical review of BKY's financial statements is the best way to uncover small frauds that might be missed by other detection methods.
• C. Auditors should avoid asking questions such as, "Has anyone ever asked you to do something unethical?" as part of their audits, as this can limit employees' willingness to communicate.
• D. Fraud audit procedures should be designed to avoid an element of surprise.

Answer: A

NEW QUESTION # 118
Which of the following criminological theories asserts that the three elements that have the most influence on crime are the availability of suitable targets, absence of capable guardians, and presence of motivated offenders?

• A. Rational choice theory
• B. Differential association theory
• C. Social control theory
• D. Routine activities theory

Answer: D

Explanation:
Key Elements of Routine Activities Theory:
This criminological theory asserts that crime is likely when three conditions converge:
Availability of suitable targets.
Absence of capable guardians (e.g., security or oversight).
Presence of motivated offenders.
Why C is Correct:
Routine activities theory focuses on the environmental and situational factors that facilitate crime, making it distinct from other criminological theories.

NEW QUESTION # 119
Which of the following Is FALSE regarding proactive fraud auditing procedures?

• A. Implementing proactive fraud audit procedures demonstrates management's intention to aggressively look for possible fraudulent conduct
• B. Fraud audit procedures should be designed to incorporate an element of surprise
• C. Analytical review of the financial statements is best used to uncover small frauds that might be missed by other detection methods
• D. Fraud assessment questioning techniques are most appropriately used as part of the normal audit process

Answer: C

Explanation:
Proactive Fraud Auditing Procedures:
Analytical reviews are effective for identifying large or unusual trends and anomalies, not necessarily small frauds.

NEW QUESTION # 120
Daniela, an independent Certified Fraud Examiner (CFE), was hired by Charles, executive director of a nonprofit organization, to investigate a straightforward embezzlement case.
Duringthe investigation, Daniela learns that Charles is involved in an unrelated fraud. Under the ACFE Code of Professional Ethics. Daniela should:

• A. Resign from the engagement.
• B. Not disclose the information about Charles.
• C. Tell the nonprofit's board of trustees about Charles
• D. Report Charles to law enforcement

Answer: C

Explanation:
ACFE Code of Professional Ethics:
CFEs must act with integrity and report material fraud findings to the appropriate authority within the organization.
Why A is Correct:
Informing the board of trustees ensures that those responsible for governance can take appropriate action. Reporting to law enforcement (option B) may breach contractual obligations unless legally required.

NEW QUESTION # 121
Which of the following statements is FALSE?

• A. Most experts agree that it is harder to detect frauds than to prevent them
• B. Controls are not effective in preventing theft and fraud If those at risk do not know of their presence
• C. Educating employees about company hotlines and reporting programs increases their perception of detection
• D. Conducting covert audits is among the most effective fraud prevention methods

Answer: D

Explanation:
Fraud Prevention Methods:
Prevention strategies often focus on education, awareness, and robust controls rather than covert methods. While covert audits can detect fraud, they are not primarily preventive.
Why D is False:
Covert audits are reactive and focused on identifying existing fraud, not preventing it.

NEW QUESTION # 122
Which of the following is one of the recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

• A. Adequate audit committee resources and authority
• B. Shareholder oversight of internal controls
• C. A mandatory independent compensation committee
• D. A written charter for management

Answer: A

Explanation:
Treadway Commission Recommendations:
The National Commission on Fraudulent Financial Reporting (Treadway Commission) issued guidelines to strengthen financial reporting integrity and reduce fraud risks.
One key recommendation was to ensure that the audit committee is well-resourced and has sufficient authority to oversee financial reporting processes effectively.
Audit Committee Role:
An adequately empowered audit committee improves oversight, supports the internal audit function, and ensures proper implementation of controls to prevent and detect fraud.
Why D is Correct:
This recommendation directly addresses the reduction of fraud probability by enhancing oversight capabilities.

NEW QUESTION # 123
XYZ. Inc. is a publicly traded, multi-national corporation. Which of the following statements is TRUE regarding the corporate governance requirements that XYZ is subject to?

• A. XYZ is required to comply with G20'OECD Principles of Corporate Governance.
• B. XYZ is subject to the Universal Corporate Governance Act because it is a publicly traded corporation.
• C. XYZ is not required to comply with any corporate governance requirements because it operates in multiple jurisdictions
• D. XYZ must comply with the various laws and regulations in the countries in which it operates

Answer: D

Explanation:
Corporate Governance in Multinational Corporations:
Multinational corporations must adhere to the legal, regulatory, and governance frameworks of each jurisdiction in which they operate. These frameworks may vary significantly across countries.
Why A is Correct:
It reflects the reality of multinational operations, where governance compliance must align with local laws and regulations.

NEW QUESTION # 124
Glenda. an internal auditor, and Brldgette. an accounts receivable clerk, have had several heated disagreements over accounting procedures and policies. Glenda has just been told that she will be the lead on the company's fraud risk assessment. During the fraud risk assessment. Glenda should:

• A. Include her disagreements with Bridgette as a factor when assessing the risk of fraud in the accounts receivable department.
• B. Have someone else perform the fraud risk assessment work related to the accounts receivable department's activities.
• C. Confront Bridgette about the disagreements and discuss how they increase the department's risk of fraud.
• D. Automatically designate the accounts receivable department as a high-risk area.

Answer: B

Explanation:
Impartiality in Fraud Risk Assessment:
As the lead on the fraud risk assessment, Glenda must maintain objectivity and avoid the appearance of bias.
Her history of disagreements with Bridgette creates a potential conflict of interest, which could compromise the assessment's credibility.

NEW QUESTION # 125
Which of the following is the MOST EFFECTIVE way for management to respond to incidents of fraud within an organization?

• A. Maintaining a policy that allows employees one warning before they are terminated for committing fraud
• B. Punishing frauds only if they have a significant financial impact.
• C. Emphasizing to all employees that the company maintains a policy of zero tolerance for fraud.
• D. Keeping all known incidents of fraud private to protect the identities of parties involved.

Answer: C

NEW QUESTION # 126
A company implements a fraud hotline but does not allow anonymous reporting. What is the MOST likely consequence?

• A. Reduced employee concerns about retaliation
• B. Elimination of false allegations
• C. Increased reporting rates
• D. Fewer tips and reduced reporting effectiveness

Answer: D

Explanation:
Employees may hesitate to report suspected misconduct if anonymity is unavailable. Fear of retaliation, damaged relationships, or career consequences can discourage reporting and reduce the effectiveness of the hotline program.

NEW QUESTION # 127
According to the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Internal Control-- Integrated Framework (the Framework), there are five interrelated components of a company's internal control. Which of the following is NOT among these five components?

• A. Monitoring
• B. Risk assessment
• C. Control activities
• D. Ethical culture

Answer: D

Explanation:
While ethical culture is critical to the control environment, it is not one of the five standalone components of the framework.
Conclusion: Ethical culture is not a separate component but a part of the control environment.

NEW QUESTION # 128
To address an employee's consistent failure to meet deadlines, a manager removes the employee's ability to work from home This is an example of what type of behavioral response?

• A. Punishment
• B. Positive reinforcement
• C. None of the above
• D. Negative reinforcement

Answer: A

Explanation:
Understanding Behavioral Responses:
Punishment:Involves removing a privilege or applying a negative consequence to decrease undesired behavior.
Removing the ability to work from home penalizes the employee for failing to meet deadlines.

NEW QUESTION # 129
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