Certified Fraud Examiner (CFE) Practice
Examination 2026 | 100 Questions &
Answers with Detailed Rationales |
Complete CFE Exam Prep & Study Guide
1. What is the primary purpose of a fraud examination?
A. To prove that a suspect is guilty
B. To identify and resolve allegations of fraud
C. To increase company profits
D. To replace the external audit
Answer: B. To identify and resolve allegations of fraud
Rationale: A fraud examination is designed to investigate suspected fraud,
determine what occurred, gather evidence, and document findings. It is not
intended simply to prove guilt or replace an audit.
2. Which three elements are commonly associated with the fraud triangle?
A. Opportunity, authority, and collusion
B. Pressure, opportunity, and rationalization
C. Motive, concealment, and restitution
D. Greed, deception, and theft
,Answer: B. Pressure, opportunity, and rationalization
Rationale: The fraud triangle identifies pressure or incentive, perceived
opportunity, and rationalization as the three conditions commonly associated
with fraudulent behavior.
3. Which fraud triangle element refers to a perceived need or incentive that
motivates fraud?
A. Opportunity
B. Rationalization
C. Pressure
D. Concealment
Answer: C. Pressure
Rationale: Pressure is the financial, personal, occupational, or other motivation
that can encourage an individual to commit fraud.
4. Which internal control weakness most directly increases the opportunity
for employee fraud?
A. Strong supervisory review
B. Segregation of duties
C. Lack of oversight
D. Mandatory vacations
Answer: C. Lack of oversight
Rationale: Weak oversight can provide an individual with the opportunity to
commit and conceal fraudulent activity without detection.
5. Which statement best describes rationalization in the fraud triangle?
A. The method used to hide evidence
B. The perpetrator’s justification for unethical conduct
C. The amount of money stolen
D. The organization's control environment
,Answer: B. The perpetrator’s justification for unethical conduct
Rationale: Rationalization is the mental justification that allows a person to
view fraudulent conduct as acceptable or deserved.
6. What is occupational fraud?
A. Fraud committed by customers against a business
B. Fraud committed by organizations against governments
C. Fraud committed by individuals against the organizations for which they work
D. Fraud involving only financial institutions
Answer: C. Fraud committed by individuals against the organizations for which
they work
Rationale: Occupational fraud involves the use of one's occupation for personal
enrichment through deliberate misuse or misapplication of the employing
organization's resources or assets.
7. Which category of occupational fraud generally involves theft or misuse of
an organization's assets?
A. Asset misappropriation
B. Financial statement fraud
C. Corruption
D. Tax evasion
Answer: A. Asset misappropriation
Rationale: Asset misappropriation occurs when employees steal or misuse
organizational assets, such as cash, inventory, equipment, or other property.
8. Which occupational fraud category involves intentional manipulation of an
organization's financial statements?
A. Corruption
B. Asset misappropriation
, C. Financial statement fraud
D. Conflict of interest
Answer: C. Financial statement fraud
Rationale: Financial statement fraud involves intentional misstatement or
omission of material information in financial reporting.
9. Which of the following is an example of corruption?
A. Stealing inventory
B. Falsifying a bank reconciliation
C. Accepting an improper payment from a vendor
D. Destroying accounting records
Answer: C. Accepting an improper payment from a vendor
Rationale: Corruption involves improper use of influence or authority for
personal benefit, including bribery, kickbacks, conflicts of interest, and illegal
gratuities.
10.What is a kickback?
A. A legitimate employee bonus
B. A payment made secretly to influence a business decision
C. A refund issued to a customer
D. A tax adjustment
Answer: B. A payment made secretly to influence a business decision
Rationale: Kickbacks are undisclosed payments or benefits provided to influence
a person's decision or action, often in connection with purchasing or contracting.
11.Which fraud scheme involves an employee submitting a false claim for
reimbursement?
A. Expense reimbursement fraud
B. Skimming
Examination 2026 | 100 Questions &
Answers with Detailed Rationales |
Complete CFE Exam Prep & Study Guide
1. What is the primary purpose of a fraud examination?
A. To prove that a suspect is guilty
B. To identify and resolve allegations of fraud
C. To increase company profits
D. To replace the external audit
Answer: B. To identify and resolve allegations of fraud
Rationale: A fraud examination is designed to investigate suspected fraud,
determine what occurred, gather evidence, and document findings. It is not
intended simply to prove guilt or replace an audit.
2. Which three elements are commonly associated with the fraud triangle?
A. Opportunity, authority, and collusion
B. Pressure, opportunity, and rationalization
C. Motive, concealment, and restitution
D. Greed, deception, and theft
,Answer: B. Pressure, opportunity, and rationalization
Rationale: The fraud triangle identifies pressure or incentive, perceived
opportunity, and rationalization as the three conditions commonly associated
with fraudulent behavior.
3. Which fraud triangle element refers to a perceived need or incentive that
motivates fraud?
A. Opportunity
B. Rationalization
C. Pressure
D. Concealment
Answer: C. Pressure
Rationale: Pressure is the financial, personal, occupational, or other motivation
that can encourage an individual to commit fraud.
4. Which internal control weakness most directly increases the opportunity
for employee fraud?
A. Strong supervisory review
B. Segregation of duties
C. Lack of oversight
D. Mandatory vacations
Answer: C. Lack of oversight
Rationale: Weak oversight can provide an individual with the opportunity to
commit and conceal fraudulent activity without detection.
5. Which statement best describes rationalization in the fraud triangle?
A. The method used to hide evidence
B. The perpetrator’s justification for unethical conduct
C. The amount of money stolen
D. The organization's control environment
,Answer: B. The perpetrator’s justification for unethical conduct
Rationale: Rationalization is the mental justification that allows a person to
view fraudulent conduct as acceptable or deserved.
6. What is occupational fraud?
A. Fraud committed by customers against a business
B. Fraud committed by organizations against governments
C. Fraud committed by individuals against the organizations for which they work
D. Fraud involving only financial institutions
Answer: C. Fraud committed by individuals against the organizations for which
they work
Rationale: Occupational fraud involves the use of one's occupation for personal
enrichment through deliberate misuse or misapplication of the employing
organization's resources or assets.
7. Which category of occupational fraud generally involves theft or misuse of
an organization's assets?
A. Asset misappropriation
B. Financial statement fraud
C. Corruption
D. Tax evasion
Answer: A. Asset misappropriation
Rationale: Asset misappropriation occurs when employees steal or misuse
organizational assets, such as cash, inventory, equipment, or other property.
8. Which occupational fraud category involves intentional manipulation of an
organization's financial statements?
A. Corruption
B. Asset misappropriation
, C. Financial statement fraud
D. Conflict of interest
Answer: C. Financial statement fraud
Rationale: Financial statement fraud involves intentional misstatement or
omission of material information in financial reporting.
9. Which of the following is an example of corruption?
A. Stealing inventory
B. Falsifying a bank reconciliation
C. Accepting an improper payment from a vendor
D. Destroying accounting records
Answer: C. Accepting an improper payment from a vendor
Rationale: Corruption involves improper use of influence or authority for
personal benefit, including bribery, kickbacks, conflicts of interest, and illegal
gratuities.
10.What is a kickback?
A. A legitimate employee bonus
B. A payment made secretly to influence a business decision
C. A refund issued to a customer
D. A tax adjustment
Answer: B. A payment made secretly to influence a business decision
Rationale: Kickbacks are undisclosed payments or benefits provided to influence
a person's decision or action, often in connection with purchasing or contracting.
11.Which fraud scheme involves an employee submitting a false claim for
reimbursement?
A. Expense reimbursement fraud
B. Skimming
