Section H Question Set: Professional Responsibilities
10 Failing to properly supervise all assistants and others who are delegated work on a fraud examination engagement is a violation of the ACFE Code of Professional Ethics. a. True. b. False.
A
11 The reason the ACFE Code of Professional Ethics restricts the types of opinions fraud examiners may express is to protect the fraud examiner from claims of: a. Libel. b. Compounding a felony. c. False imprisonment. d. None of the above.
A
12 Under the ACFE Code of Professional Ethics, fraud examiners are absolutely prohibited from expressing opinions regarding the guilt or innocence of any party. a. True. b. False.
A
17 In the context of a fraud examination, a mindset of professional skepticism means: a. All of these answers are correct. b. Fraud examiners should relax their attitude of skepticism only when the evidence shows no signs of fraud. c. Fraud examiners should always begin their assignments with the belief that something is amiss. d. The fraud examiner's professional skepticism can be dispelled only by evidence.
A
18 Which of the following statements is true regarding the disclosure of confidential client information? a. A fraud examiner can reveal confidential client information when responding to a legal court order. b. A fraud examiner is only allowed to respond to a legal court order when his client grants him authorization to do so. c. Confidential information provided to a fraud examiner by a client is considered privileged and therefore legally exempt from disclosure in all circumstances. d. Fraud examiners are always bound by confidentiality, even when refusing to disclose information violates the law.
A
20 Which of the following is an obligation that relates to professional responsibility? a. to employ the degree of knowledge, skill, and judgment ordinarily possessed by members of the profession b. cooperate with other professional members to improve the art of accounting, maintain the public's confidence c. to always do exactly what a client wants no matter what the circumstances d. to ensure all financial processes of the organization are insulated from fraudulent activities
A
22 As per ACFE Standards of Professional Conduct, which of the following requires a member not to disclose privileged information obtained during the course of an engagement without the express consent of the client or order of a court? a. confidentiality and integrity b. due professional care and objectivity c. professionalism and fair dealing d. client interest and equal treatment
A
23 Which of the following is an example of a violation of the ACFE Code of Professional Ethics' requirement for diligent, professional behavior? a. Skipping vital investigation steps to improve the efficiency of a fraud examination. b. All of these answers are correct. c. Delegating a task to a lower-level employee and overseeing that individual's performance. d. Obtaining more evidence than the minimum amount needed to prove a case.
A
25 Fraud examiners generally are not entitled to claim ignorance of the law as a defense for illegal activity. a. True. b. False.
A
26 Materiality in a fraud examiner's report is determined by the perceptions and conclusions of the report's user. a. True. b. False.
A
27 Professional organizations, such as the Association of Certified Fraud Examiners, have codes of ethics because: a. All of these answers are correct. b. They facilitate practical enforcement and profession-wide internal discipline. c. They serve as a reference and benchmark for ethical guidance. d. They provide more direct solutions to professional ethical dilemmas than might exist under general ethical principles.
A
29 In considering general ethics, a person's primary goal is to arrive at a set of acceptable methods for making ethical decisions to fulfill all his roles. a. True. b. False.
A
32 Which of the following is a primary driver of professional responsibility failure? a. practitioners overestimating their respective skill sets b. practitioners subordinating individual judgement to professional rules c. practitioners relying on fellow members' work d. practitioners specifically representing the engaging attorney's theory
A
35 The ACFE Code of Professional Ethics contains sections covering which of the following? a. All of these answers are correct. b. Professional improvement. c. Confidential information. d. Basis for opinions.
A
36 The ACFE Code of Professional Ethics explicitly prohibits which of the following? a. All of these answers are correct. b. Unethical conduct. c. Conflicts of interest. d. Illegal conduct.
A
38 In reporting the results of a fraud examination, a fraud examiner is required to disclose any information which, if not disclosed, would change a user's perceptions and conclusions. a. True. b. False.
A
39 Advocacy is the threat that a member will promote a client or employer's position to the point that his or her objectivity is compromised. a. True. b. False.
A
43 Justine, a CFE, was contacted regarding an engagement to investigate a complex insurance fraud case involving an organized crime ring. Justine had previously taken a self-study CPE course on insurance fraud schemes, but she had no other training or experience in such cases. However, she accepted the engagement and chose to conduct the work herself. Justine's conduct would likely be a violation of the ACFE Code of Professional Ethics. a. True. b. False.
A
45 If a Certified Fraud Examiner fails to meet the specified annual minimum continuing professional education requirements, he will be in violation of the ACFE Code of Professional Ethics. a. True. b. False.
A
47 Bryan, a CFE, locks the door to the interview room and refuses to allow the suspect to leave despite repeated requests. Later, the suspect sues (successfully), claiming that he was falsely imprisoned. Which of the following statements is true? a. This conduct would be a violation of the ACFE Code of Professional Ethics. b. This conduct would not be a violation of the ACFE Code of Professional Ethics under any circumstances. c. This conduct would be a violation of the ACFE Code of Professional Ethics only if Bryan knew the conduct was illegal. d. This conduct would be a violation of the ACFE Code of Professional Ethics only if the suspect was innocent of fraud.
A
49 ACFE, the world's largest antifraud organization, requires its members to comply with six fundamental rules as per ACFE's Code of Professional Standards. a. False. b. True.
A
5 Which of the following is a fraud examiner permitted to express an opinion regarding? a. The effectiveness of an organization's internal controls. b. None of these answers are correct. c. The guilt of a particular individual. d. The innocence of a particular individual.
A
51 Fraud examiners should consider the nature of the assignment and the preliminary information available in forming the engagement hypothesis. a. True. b. False.
A
53 Leo, a Certified Fraud Examiner, conducted a fraud examination at Blue Corp. Anna was a prime suspect in the disappearance of money, but Leo could not prove it. Later, Leo discovered Anna had been recently hired by Red Corp., another client of his. Under the ACFE Code of Professional Ethics, Leo must: a. Not inform Red Corp. b. Inform Red Corp. c. None of these answers are correct. d. Inform Red Corp. if the evidence is clear and convincing.
A
55 ________ occurs when a testifying expert is specifically hired to represent the engaging attorney's theory. a. Selection bias b. Conscious bias c. Unconscious bias d. Witting bias
A
9 Which of the following statements best differentiates a principle and a rule as per AICPA's Code of Professional Conduct? a. A principle is a value-based internal force for behavioral action and a rule is an authoritative regulatory force for behavioral action. b. A principle is an external person who oversees the behavioral actions of those who practice a profession, while a rule is an authoritative regulatory force for behavioral action. c. A principle is regulatory force with advanced education and training and a rule is a value-based internal force for behavioral action. d. A principle is an external person who oversees the behavioral actions of those who practice a profession, while a rule is a value-based internal force for behavioral action.
A
14 During the course of a fraud examination, Omar, an employee of XYZ Inc., approaches Maryam, a Certified Fraud Examiner and fellow employee of XYZ, and tells Maryam that he knows of a major fraud being committed by company management. However, Omar says he can only provide details if Maryam promises him absolute confidentiality. In response to Omar's condition, Maryam should agree to keep the source of the information confidential, even though she knows she will eventually have to reveal Omar's identity. a. True. b. False.
B
15 Under the ACFE Code of Professional Ethics, fraud examiners are strictly prohibited from expressing opinions on technical matters. a. True. b. False.
B
16 The duty of loyalty means that people in a fiduciary relationship must act with such care as an ordinarily prudent person would employ in similar positions. a. True. b. False.
B
2 During an admission-seeking interview of a fraud suspect, Gary, a Certified Fraud Examiner, accuses the suspect of having committed a fraud. Gary's accusation violates the ACFE Code of Professional Ethics. a. True. b. False.
B
24 A professional association enjoys a high level of public trust and confidence even though it can never be legalized. a. True. b. False.
B
28 In the context of a fraud examination, the preservation of integrity requires that the fraud examiner avoid all differences of opinion regarding all material matters with the other parties to the engagement. a. True. b. False.
B
3 If a fraud examiner makes a mistake in judgment, he should avoid admitting to the error, as it could compromise the integrity of his case. a. True. b. False.
B
30 During a fraud examination, John, a CFE, becomes aware of a situation that might appear to others as though he has a conflict of interest, even though there is no actual conflict. To address the situation, John's best course of action is to: a. None of these answers are correct. b. Immediately disclose the situation to company management. c. Immediately withdraw from the engagement without disclosing the potential conflict to management. d. Continue working on the assignment without disclosing the potential conflict but take care to avoid any areas where an actual conflict might arise.
B
33 Under the ACFE Code of Professional Ethics, a fraud examiner is strictly prohibited from accepting an assignment to uncover fraud in a company in which he has a major interest. a. True. b. False.
B
37 Under the ACFE Code of Professional Ethics, fraud examiners are strictly prohibited from revealing confidential client information under any circumstances. a. True. b. False.
B
40 Under the ACFE Code of Professional Ethics, information provided to a fraud examiner by a client is considered privileged information and is therefore protected from being legally demanded by outside parties. a. True. b. False.
B
41 To be in compliance with the ACFE Code of Professional Ethics, fraud examiners must have an expert level of skill and knowledge for every circumstance that might be encountered in a fraud examination. a. True. b. False.
B
42 Lee, a Certified Fraud Examiner, was hired to investigate a company. After he carefully examined the company, he issued a report that stated, in part, "... in my opinion, this operation is free of material fraud." Such an opinion is permitted under the ACFE Code of Professional Ethics. a. True. b. False.
B
44 The function of ethical principles is to provide individuals with a straightforward means to determine the answer to any problem they face. a. True. b. False.
B
46 Which of the following statements is true of characteristics of a profession? a. There are published authoritative performance and ethical standards for a profession even though it is never legalized by a regulatory body. b. It is organized into associations and there are specific requirements for admission into such associations and maintenance of membership. c. Violations of a profession's performance and ethical standards would always result in expulsion from membership. d. It enjoys a high level of public trust and confidence even though it is never legalized by a regulatory body.
B
50 As professional standards serve to improve the consistency and quality of practice, various organizational standards would always be consistent with each other. a. True. b. False.
B
52 Rachel, an independent CFE, was hired by Laura, the CEO of Black and White Inc., to investigate a case of alleged vendor overbilling. During the investigation, Rachel learns that Laura is involved in an unrelated fraud scheme. Under the ACFE Code of Professional Ethics, Rachel should resign from the engagement without disclosing the evidence against Laura. a. True. b. False.
B
6 As part of their responsibilities under the ACFE Code of Professional Ethics, in collecting evidence, fraud examiners must: a. Preserve the integrity of relevant evidence. b. All of these answers are correct. c. Obtain and document evidence such that the chain of custody is preserved. d. Ensure that all necessary evidence is obtained.
B
7 To be considered a profession, a field such as fraud examination must have a body of knowledge unique to itself. a. True. b. False.
B
1 Roger has just completed a fraud examination report containing confidential information for ABC Inc., a client. He received a call from the local police requesting a copy of the report. Which of the following statements is false? a. Roger can turn over the report if his client consents. b. Roger can turn over the report if the information is requested in a search warrant. c. Roger can turn over the report without any repercussions because he owns the information contained in the document. d. Roger can turn over the report if it is demanded by a court order.
C
19 Which of the following statements is true of unconscious adversarial bias for testifying expert witnesses? a. It occurs when an expert is specifically hired to represent the engaging attorney's theory. b. Identifying and eliminating, or at least neutralizing, unconscious bias is no big task. c. It is extremely prevalent among law enforcement and government witnesses. d. The first opportunity to identify and eliminate unconscious bias falls to opposing counsel.
C
21 Which of the following statements is true of the principle of due professional care in the ACFE Standards of Professional Conduct? a. It urges a member to express an opinion or state affirmatively that the financial statements of an entity are presented in conformity with GAAP. b. It requires a member to commit discreditable acts and to always conduct themselves in the best interests of the profession. c. It requires members to adequately plan and supervise professional services. d. It urges members to qualify the understanding with the client for any significant changes.
C
31 In general, the lowest level of reference for making moral decisions is: a. Philosophical principles. b. Individual standards. c. The law. d. None of these answers are correct.
C
48 In the context of fraud examination, integrity requires: a. Independence of mental attitude and avoidance of conflicts of interest. b. An ability to analyze situations where no professional rules are specifically applicable and determine right from wrong. c. All of these answers are correct. d. Subordination of desires for personal gain to the interests of clients, employers, and the public.
C
54 There are five principal characteristics that distinguish professional fields from other vocations. Which of the following is not one of them? a. A specialized body of knowledge. b. Standards of conduct governing professionals' relationships with clients, colleagues, and the public. c. A requirement for all members to have earned advanced degrees. d. Recognition and acceptance by society.
C
8 Craig and Donna each own 40 percent of the shares of Indiewealth and serve on its board of directors. George is also a shareholder, but he is not a member of the board of directors. Donna dies, and her son, Steven, inherits her shares of Indiewealth and replaces her on the board. Steven, however, is inattentive to Indiewealth's corporate affairs. During this time, Craig diverts corporate funds for personal use, and consequently, Indiewealth becomes insolvent. If George decides to sue Steven for violating his fiduciary duties, under what theory is he likely to file the suit? a. Violating the duty of loyalty. b. Violating the duty of responsibility. c. Violating the duty of care. d. Violating the duty of reasonableness.
C
13 Which of the following statements best differentiates a profession and a professional? a. A profession is an occupation that requires advanced education and training and a professional is a person who oversees the behavioral actions of those who practice a profession. b. A profession is a value-based internal force for behavioral action and a professional is a person who oversees the behavioral actions of those who practice a profession. c. A profession is an occupation that requires advanced education and training and a professional is a value-based internal force for behavioral action. d. A profession is an occupation that requires advanced education and training and a professional is a person who practices a profession.
D
34 The ACFE Code of Professional Ethics prohibits fraud examiners from engaging in conflicts of interest. Which of the following situations should a fraud examiner avoid to ensure compliance with this rule? a. Undertaking engagements that create a hardship or loss to the fraud examiner's full-time employer. b. Undertaking an engagement to secretly infiltrate the fraud examiner's employing organization and transmit inside information to another party. c. Undertaking engagements for both sides to a particular controversy or issue. d. All of these answers are correct.
D
4 Under the ACFE Code of Professional Ethics, evidence and conclusions are considered ___________ if knowledge of them would affect clients' decisions based on a fraud examiner's report. a. Confidential. b. Reliable. c. Circumstantial. d. Material.
D
56 As per ACFE Standards of Professional Conduct, the principle of ________ require a member not to commit discreditable acts and to always conduct themselves in the best interests of the profession. a. communication with the client b. understanding with client c. professional competence and confidentiality d. integrity and objectivity
D
