CFE: Fraud Prevention and Deterrence
Question and answers verified to pass
2025
effective training programs - correct answer ✔U.S. Corporate Sentencing
Guideline makes them necessary, also periodically & appropriately
communicate program's compliance requirements & procedures to all
employees affected by the program, including upper-level personnel
- programs: inform employees about company's stance on corporate
compliance and about what kinds of acts and omissions are prohibited by the
law and by the organization.
information and communication - correct answer ✔component of COSO's
Internal Control-Integrated Framework: exchange of info so employees can
carry out their internal control responsibilities and achieve the organization's
objectives
organization's principles:
• obtain or generate & use relevant, quality info to support the functioning of
internal control.
• internally communicate info, like objectives & responsibilities for internal
control, necessary to support the functioning of internal control.
• communicate with external parties on matters affecting the functioning of
internal control.
gathering information during a fraud risk assessment - correct answer ✔•
Interviews: effective way to conduct candid one-on-one conversations with
employees
• Focus groups: enable the assessor to observe the interactions among a
group of employees as they collectively discuss a question or issue
,• Survey: electronic or paper questionnaires , anonymous or directly
attributable to participants
• Anonymous feedback mechanisms: means for anonymous employee
suggestions or responses
differential reinforcement theory - correct answer ✔people learn social
behavior by operant conditioning, behavior controlled by stimuli that follow the
behavior
- Behavior is reinforced when positive rewards are gained or punishment is
avoided (negative reinforcement)
- behavior is weakened by negative stimuli (punishment) and loss of reward
(negative punishment)
- deviant or criminal behavior is begun or persists depends on the degree to
which it has been rewarded or punished and the rewards or punishments
attached to its alternatives.
social control theory - correct answer ✔institutions of the social system train
and press people into patterns of conformity.
-Schools: adjustment in society
- peers: ethos of success & conventional behavior
- parents: law-abiding habits in their youngsters, even if themselves
sometimes violate the rules
thesis: to extent person fails to become attached to the variety of control
agencies of the society, his chances of violating the law are increased.
- "assumes the bond of affection for conventional persons is a major deterrent
to crime. The stronger this bond, the more likely the person is to take it into
account when and if he contemplates a criminal act."
- "What will my spouse—or my mother and father—think if they find out?"
,theory of differential association - correct answer ✔developed by
criminologist Edwin Sutherland:
(1) criminal behavior is learned
(2) learned from other people by communication
(3) criminal behavior is acquired through participation with intimate personal
groups
(4) the learning process includes the shaping of motives, drives,
rationalizations, and attitudes
(5) motives are learned from definitions of legal codes as being favorable or
unfavorable
(6) person becomes a criminal because of excess of definitions favorable to
violation of the law over definitions unfavorable to violation of the law
(7) differential association may vary in frequency, duration, priority, and
intensity
(8) learning criminal behavior involves all the mechanisms of other learning
(9) learning differs from pure imitation
(10) while criminal behavior is an expression of general needs and values, it is
not explained by these needs and values
"Why People Obey the Law" - correct answer ✔Tom Tyler conducted a study
(called the Chicago Study) to test the concept that if the authorities have
legitimacy, the public will obey the law
- results: people generally have a high level of normative commitment to abide
by the law
- felt breaking law was morally wrong and laws should be obeyed even if don't
agree with them.
- Authorities who can tap into and encourage those views will inspire
compliance
, - employees with a strong sense of loyalty to their employer will not violate
company policies because would be a betrayal to the company.
Legitimacy - correct answer ✔essential in giving governments & leaders
authority. - authorities have legitimacy, public will obey law
- maximize compliance & minimize hostility toward laws & rules, gain
legitimacy in eyes of public
Skinner - correct answer ✔behavior is most effectively modified by managing
& modifying desires through reinforcement
- replace destructive behaviors with productive ones instead of punishing an
existing impulse.
- behavioral studies show punishment is the least effective method of
changing behavior.
- punishing: temporary suppression of behavior, but only with constant
supervision and application, loses because provides negative consequences
—administering penalties and taking away desirables.
behaviorist view of the workplace - correct answer ✔Emotions are a
predisposition for people's actions. - emotional associations are important
factors in conditioning behavior, associations can be manipulated in
conditioning the behavior
- managers can modify employee's bad emotional circumstance with
adequate compensation and recognition of workers' accomplishments.
- Incentive programs & task-related bonuses: employees who feel challenged
& rewarded by their jobs will produce more work at a higher quality and are
less likely to violate the law.
U.S. Corporate Sentencing Guidelines - correct answer ✔designed to
provide incentives for organizations to maintain internal mechanisms for
preventing, detecting, and reporting criminal conduct
Question and answers verified to pass
2025
effective training programs - correct answer ✔U.S. Corporate Sentencing
Guideline makes them necessary, also periodically & appropriately
communicate program's compliance requirements & procedures to all
employees affected by the program, including upper-level personnel
- programs: inform employees about company's stance on corporate
compliance and about what kinds of acts and omissions are prohibited by the
law and by the organization.
information and communication - correct answer ✔component of COSO's
Internal Control-Integrated Framework: exchange of info so employees can
carry out their internal control responsibilities and achieve the organization's
objectives
organization's principles:
• obtain or generate & use relevant, quality info to support the functioning of
internal control.
• internally communicate info, like objectives & responsibilities for internal
control, necessary to support the functioning of internal control.
• communicate with external parties on matters affecting the functioning of
internal control.
gathering information during a fraud risk assessment - correct answer ✔•
Interviews: effective way to conduct candid one-on-one conversations with
employees
• Focus groups: enable the assessor to observe the interactions among a
group of employees as they collectively discuss a question or issue
,• Survey: electronic or paper questionnaires , anonymous or directly
attributable to participants
• Anonymous feedback mechanisms: means for anonymous employee
suggestions or responses
differential reinforcement theory - correct answer ✔people learn social
behavior by operant conditioning, behavior controlled by stimuli that follow the
behavior
- Behavior is reinforced when positive rewards are gained or punishment is
avoided (negative reinforcement)
- behavior is weakened by negative stimuli (punishment) and loss of reward
(negative punishment)
- deviant or criminal behavior is begun or persists depends on the degree to
which it has been rewarded or punished and the rewards or punishments
attached to its alternatives.
social control theory - correct answer ✔institutions of the social system train
and press people into patterns of conformity.
-Schools: adjustment in society
- peers: ethos of success & conventional behavior
- parents: law-abiding habits in their youngsters, even if themselves
sometimes violate the rules
thesis: to extent person fails to become attached to the variety of control
agencies of the society, his chances of violating the law are increased.
- "assumes the bond of affection for conventional persons is a major deterrent
to crime. The stronger this bond, the more likely the person is to take it into
account when and if he contemplates a criminal act."
- "What will my spouse—or my mother and father—think if they find out?"
,theory of differential association - correct answer ✔developed by
criminologist Edwin Sutherland:
(1) criminal behavior is learned
(2) learned from other people by communication
(3) criminal behavior is acquired through participation with intimate personal
groups
(4) the learning process includes the shaping of motives, drives,
rationalizations, and attitudes
(5) motives are learned from definitions of legal codes as being favorable or
unfavorable
(6) person becomes a criminal because of excess of definitions favorable to
violation of the law over definitions unfavorable to violation of the law
(7) differential association may vary in frequency, duration, priority, and
intensity
(8) learning criminal behavior involves all the mechanisms of other learning
(9) learning differs from pure imitation
(10) while criminal behavior is an expression of general needs and values, it is
not explained by these needs and values
"Why People Obey the Law" - correct answer ✔Tom Tyler conducted a study
(called the Chicago Study) to test the concept that if the authorities have
legitimacy, the public will obey the law
- results: people generally have a high level of normative commitment to abide
by the law
- felt breaking law was morally wrong and laws should be obeyed even if don't
agree with them.
- Authorities who can tap into and encourage those views will inspire
compliance
, - employees with a strong sense of loyalty to their employer will not violate
company policies because would be a betrayal to the company.
Legitimacy - correct answer ✔essential in giving governments & leaders
authority. - authorities have legitimacy, public will obey law
- maximize compliance & minimize hostility toward laws & rules, gain
legitimacy in eyes of public
Skinner - correct answer ✔behavior is most effectively modified by managing
& modifying desires through reinforcement
- replace destructive behaviors with productive ones instead of punishing an
existing impulse.
- behavioral studies show punishment is the least effective method of
changing behavior.
- punishing: temporary suppression of behavior, but only with constant
supervision and application, loses because provides negative consequences
—administering penalties and taking away desirables.
behaviorist view of the workplace - correct answer ✔Emotions are a
predisposition for people's actions. - emotional associations are important
factors in conditioning behavior, associations can be manipulated in
conditioning the behavior
- managers can modify employee's bad emotional circumstance with
adequate compensation and recognition of workers' accomplishments.
- Incentive programs & task-related bonuses: employees who feel challenged
& rewarded by their jobs will produce more work at a higher quality and are
less likely to violate the law.
U.S. Corporate Sentencing Guidelines - correct answer ✔designed to
provide incentives for organizations to maintain internal mechanisms for
preventing, detecting, and reporting criminal conduct
