1|Page
CFCI 2026 EXAM PREP MADE EASY – COMPLETE
QUESTIONS AND SOLVED ANSWERS.||NEWEST
EXAM!!!
What are the three broad categories of detailed fraud
auditing responses? - Answer-1. The nature of auditing
procedures
2. The timing of substantive tests may need to be
modified.
3. The extent of the procedures applied should reflect the
assessment of the risks of material misstatement due to
fraud.
Qualitative Standards of CIGIE - Answer-1. Planning
2. Executing investigations
3. Reporting
4. Managing investigative findings.
Evidence - Answer-Evidence is categorized as
- "real evidence" (any specific physical object such as an
invoice);
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- "demonstrative evidence" (such as the computerized
sketch or drawing of a loading dock); or
- "testimonial evidence" (such as in the oral form of a
witness, or others testifying in court).
Sometimes evidence may consist of all three—real,
demonstrative, and testimonial
Fraud Risk Assessment includes the following steps -
Answer-1: Create an FRA Team
2: Identify the Organization's Universe of Potential Risks
3: Analyze the Likelihood of Each Scheme or Scenario
Occurring
4: Assess the Materiality of Risk.
5: Assess Risks Within the Context of Existing Anti-Fraud
Controls
There are three main categories of materiality in a FRA -
Answer-1. Inconsequential
2. More than inconsequential
3. Material
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Ultimate goal of a FRA - Answer-The ultimate objective of
any FRA is to guide the institution's auditors in adjusting
their audit plans to incorporate specific techniques for
detecting fraud, and to assist management in formulating
and/or adjusting its anti-fraud controls to reduce the risk of
fraud.
Approaches to FRAs will differ from organization to
organization, but most FRAs focus on identifying fraud
risks in six key categories: - Answer-1. Fraudulent financial
reporting
2. Misappropriation of assets
3. Expenditures and liabilities for an improper purpose
4. Revenue and assets obtained by fraud
5. Costs and expenses avoided by fraud
6. Financial misconduct by senior management
FRA step 3: Analyze the Likelihood of Each Scheme or
Scenario Occurring
International auditing standards specify four risk levels: -
Answer-1. Remote
2. More than remote
3. Reasonably possible
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4. Probable
FACTA Red Flags List of Suggested Alerts, Notifications or
Warnings from a Consumer Reporting Agency - Answer-1.
Suspicious Documents
2. Suspicious Personal Identifying Information
3. Unusual Use of, or Suspicious Activity Related to, the
Covered Account
4. Notice from Customers, Victims of Identity Theft, Law
Enforcement Authorities, or Other Persons Regarding
Possible Identity Theft in Connection with Covered
Accounts Held by the Financial Institution or Creditors
The Institute of Internal Auditors (IIA) has endorsed audit
standards that outline the techniques and procedures for
conducting an FRA—specifically, those contained in
Statement of Auditing Standards 99 (SAS 99 and AU-C
240) - Answer-FRA is meant to assist auditors and/or fraud
examiners in adjusting their audit and investigation plans,
and testing to focus on gathering evidence of red flags for
fraud schemes and scenarios that the FRA identifies
According to AU-C 240 (and implied by the revised 2013
Framework), regardless of who conducts the FRA,
CFCI 2026 EXAM PREP MADE EASY – COMPLETE
QUESTIONS AND SOLVED ANSWERS.||NEWEST
EXAM!!!
What are the three broad categories of detailed fraud
auditing responses? - Answer-1. The nature of auditing
procedures
2. The timing of substantive tests may need to be
modified.
3. The extent of the procedures applied should reflect the
assessment of the risks of material misstatement due to
fraud.
Qualitative Standards of CIGIE - Answer-1. Planning
2. Executing investigations
3. Reporting
4. Managing investigative findings.
Evidence - Answer-Evidence is categorized as
- "real evidence" (any specific physical object such as an
invoice);
,2|Page
- "demonstrative evidence" (such as the computerized
sketch or drawing of a loading dock); or
- "testimonial evidence" (such as in the oral form of a
witness, or others testifying in court).
Sometimes evidence may consist of all three—real,
demonstrative, and testimonial
Fraud Risk Assessment includes the following steps -
Answer-1: Create an FRA Team
2: Identify the Organization's Universe of Potential Risks
3: Analyze the Likelihood of Each Scheme or Scenario
Occurring
4: Assess the Materiality of Risk.
5: Assess Risks Within the Context of Existing Anti-Fraud
Controls
There are three main categories of materiality in a FRA -
Answer-1. Inconsequential
2. More than inconsequential
3. Material
,3|Page
Ultimate goal of a FRA - Answer-The ultimate objective of
any FRA is to guide the institution's auditors in adjusting
their audit plans to incorporate specific techniques for
detecting fraud, and to assist management in formulating
and/or adjusting its anti-fraud controls to reduce the risk of
fraud.
Approaches to FRAs will differ from organization to
organization, but most FRAs focus on identifying fraud
risks in six key categories: - Answer-1. Fraudulent financial
reporting
2. Misappropriation of assets
3. Expenditures and liabilities for an improper purpose
4. Revenue and assets obtained by fraud
5. Costs and expenses avoided by fraud
6. Financial misconduct by senior management
FRA step 3: Analyze the Likelihood of Each Scheme or
Scenario Occurring
International auditing standards specify four risk levels: -
Answer-1. Remote
2. More than remote
3. Reasonably possible
, 4|Page
4. Probable
FACTA Red Flags List of Suggested Alerts, Notifications or
Warnings from a Consumer Reporting Agency - Answer-1.
Suspicious Documents
2. Suspicious Personal Identifying Information
3. Unusual Use of, or Suspicious Activity Related to, the
Covered Account
4. Notice from Customers, Victims of Identity Theft, Law
Enforcement Authorities, or Other Persons Regarding
Possible Identity Theft in Connection with Covered
Accounts Held by the Financial Institution or Creditors
The Institute of Internal Auditors (IIA) has endorsed audit
standards that outline the techniques and procedures for
conducting an FRA—specifically, those contained in
Statement of Auditing Standards 99 (SAS 99 and AU-C
240) - Answer-FRA is meant to assist auditors and/or fraud
examiners in adjusting their audit and investigation plans,
and testing to focus on gathering evidence of red flags for
fraud schemes and scenarios that the FRA identifies
According to AU-C 240 (and implied by the revised 2013
Framework), regardless of who conducts the FRA,
