Certified Fraud Examiner CFE-Fraud-Prevention-and-Deterrence Syllabus Exam Questions Answers

Internal auditors assist the organization in fraud prevention and detection by evaluating controls, considering fraud risks, identifying red flags, and supporting the fraud risk assessment process. The internal audit function may conduct or support an organization-wide assessment of fraud risks, depending on the internal audit charter and governance structure. Option A is management’s responsibility because management establishes and maintains internal controls at a reasonable cost. Option B is primarily a governance responsibility of the board or audit committee, which oversees management’s fraud risk activities. Option D describes an external financial statement audit reporting role and is not a general internal audit responsibility. Therefore, the best answer is that internal auditors can perform an organization-wide assessment of fraud risks.

Professional skepticism requires a questioning mind, critical assessment of evidence, and awareness that fraud can exist even when initial information appears innocent. Tasha should not begin with a fixed belief that fraud occurred, because that would bias the engagement. She also should not assume fraud has not occurred until conclusive evidence appears, because that would weaken her ability to identify red flags. Forming a hypothesis before reviewing preliminary information is also improper because the fraud examination should be guided by facts and logical fraud theory development. The most accurate approach is to maintain skepticism throughout the engagement. Even when evidence does not initially show fraud, a CFE should continue to evaluate information objectively and remain alert to inconsistencies, alternative explanations, and concealed misconduct. Therefore, option C is correct.