FRAUD EXAMINATION EXAM PAPER 2026
TESTED QUESTIONS AND PRACTICE
SOLUTION
◉ Indirect fraud Answer: when employees take bribes or kickbacks
from vendors, customers, or other outside the company to allow for
lower prices, etc.
◉ Why does fraud seem to be increasing at such an alarming rate?
Answer: Computers, the internet, and technology make fraud eaiser
to commit
◉ Important elements of fraud: Answer: Confidence
Deception
Trickery
◉ People who usually commit fraud are: Answer: Trusted
individuals and least suspected
◉ When a fraud is committed, criminal prosecution usually
proceeds before civil litigation Answer: True
,◉ The ACFE is a nonprofit organization dedicated to the prevention
and dedication of fraud throughtout the world Answer: True
◉ Corporate employee fraud-fighters: Answer: Prevent, detect, and
investigate fraud within a company
◉ Fraud Triangle Answer: Pressure
Rationalization
Opportunity
◉ Pressure Answer: Financial needs, need to report financial results
better than actual performance, frustration with work, or even a
challenge to beat the system
◉ Financial pressures Answer: 1.Greed
2.Living beyond one's means
3.Inability to pay bills or personal debt
4.Poor Credit
5.Personal financial losses
6.Unexpected financial needs
◉ Vice pressures Answer: Gambling, drugs, alcohol, and expensive
extramarital relationships
, *Worst kind of pressure motivating someone to commit fraud.
◉ Element of opportunity Answer: -Lack of internal controls that
prevent and/or detect fraudulent behavior
-Inability to judge quality performance
-Failure to discipline fraud perpetrators
-Lack of access to information or asymemetrical information
-Ignorance, apathy, or incapacity
-Lack of an audit trail
◉ 5 primary control activities Answer: 1. Authorization 2.
Segregation of duties 3. Physical safeguards 4. Documents/Reports
5. Independent checks
◉ The Control Enviornment (work atmoshpere that an organization
establishes for its employees): Answer: 1.Managements Role: setting
the tone at the top. Modeling (being an example)
-code of ethics
2. Managements communication. Distinguish between acceptable
and unacceptable behavior. Labeling (communication)
-codes of conduct, orientation meetings, training,
supervisor/employee discussions.
TESTED QUESTIONS AND PRACTICE
SOLUTION
◉ Indirect fraud Answer: when employees take bribes or kickbacks
from vendors, customers, or other outside the company to allow for
lower prices, etc.
◉ Why does fraud seem to be increasing at such an alarming rate?
Answer: Computers, the internet, and technology make fraud eaiser
to commit
◉ Important elements of fraud: Answer: Confidence
Deception
Trickery
◉ People who usually commit fraud are: Answer: Trusted
individuals and least suspected
◉ When a fraud is committed, criminal prosecution usually
proceeds before civil litigation Answer: True
,◉ The ACFE is a nonprofit organization dedicated to the prevention
and dedication of fraud throughtout the world Answer: True
◉ Corporate employee fraud-fighters: Answer: Prevent, detect, and
investigate fraud within a company
◉ Fraud Triangle Answer: Pressure
Rationalization
Opportunity
◉ Pressure Answer: Financial needs, need to report financial results
better than actual performance, frustration with work, or even a
challenge to beat the system
◉ Financial pressures Answer: 1.Greed
2.Living beyond one's means
3.Inability to pay bills or personal debt
4.Poor Credit
5.Personal financial losses
6.Unexpected financial needs
◉ Vice pressures Answer: Gambling, drugs, alcohol, and expensive
extramarital relationships
, *Worst kind of pressure motivating someone to commit fraud.
◉ Element of opportunity Answer: -Lack of internal controls that
prevent and/or detect fraudulent behavior
-Inability to judge quality performance
-Failure to discipline fraud perpetrators
-Lack of access to information or asymemetrical information
-Ignorance, apathy, or incapacity
-Lack of an audit trail
◉ 5 primary control activities Answer: 1. Authorization 2.
Segregation of duties 3. Physical safeguards 4. Documents/Reports
5. Independent checks
◉ The Control Enviornment (work atmoshpere that an organization
establishes for its employees): Answer: 1.Managements Role: setting
the tone at the top. Modeling (being an example)
-code of ethics
2. Managements communication. Distinguish between acceptable
and unacceptable behavior. Labeling (communication)
-codes of conduct, orientation meetings, training,
supervisor/employee discussions.
