Planning and Conducting a Fraud Examination (CFE) Questions

Question 1

A fraud examiner is working a predicated allegation that the purchasing manager receives kickbacks from a supplier. While reviewing vendor master files, the examiner finds that a recently added vendor, which has no supporting purchase orders, shares a home address with the manager's assistant. The kickback evidence is still incomplete. Which of the following is the BEST way for the examiner to handle the address match?

Interview the assistant about the vendor link to confirm predication for the new issue Keep work within the kickback allegation, since the original predication fixes scope Treat the match as fresh predication and build a separate fraud theory to test Fold the match into the kickback theory and treat the assistant as a co-conspirator

Correct Answer: Treat the match as fresh predication and build a separate fraud theory to test

A vendor with no purchase orders that shares an address with an employee is a classic shell company red flag, so it supplies independent predication for a new fraud theory that should be developed and tested on its own.
Limiting work to the kickback allegation wrongly assumes predication is fixed; new facts can justify expanding the examination. Folding the match into the kickback theory assumes a conspiracy without evidence. Interviewing the assistant now is premature, since suspects are interviewed last, after documents and neutral witnesses, and an early interview could tip them off.
Key concept: new predication and the fraud theory approach.

Question 2

A fraud examiner investigated a shell company billing scheme, collecting documents and interviewing witnesses. The organization later sues the shell company's owner to recover the loss. Legal counsel wants the examiner to explain her findings at trial and to present a loss calculation prepared using an accepted method. Which of the following BEST describes the testimony the examiner can offer?

Testify to facts she observed and, once qualified, give an expert opinion on the loss Give the loss opinion as an expert only after withdrawing as a fact witness on findings Give an expert opinion on the loss and on whether the vendor intended to defraud Testify only to facts she observed, since leading the examination bars any expert opinion

Correct Answer: Testify to facts she observed and, once qualified, give an expert opinion on the loss

A fraud examiner who conducted the investigation can testify as a fact witness about what she personally observed, documented, and learned. Once the court qualifies her as an expert, she can also give an opinion on the loss calculated using an accepted methodology.
Leading the examination does not bar expert testimony; one witness may serve in both roles. Opining that the vendor intended to defraud is improper, because ultimate issues of guilt or intent are for the trier of fact. Nothing requires her to withdraw as a fact witness before offering an expert opinion.
Key concept: dual role of the fraud examiner as fact witness and expert witness, and the prohibition on opining about guilt or intent.

Question 3

When planning a fraud examination, what is the chief value of anticipating how the suspected scheme would most likely be concealed?

It fixes the loss amount that must exist to justify predication It shows which records are likely to hold traces of the scheme It proves the subject's intent, an element the report must state It decides which witness the examiner should interview first

Correct Answer: It shows which records are likely to hold traces of the scheme

Anticipating how a scheme would be concealed tells the examiner where to look, because concealment leaves traces in particular records such as altered journal entries, fictitious vendor files, or adjusted inventory counts. This lets the examiner target the documents and data most likely to hold evidence.
Predication rests on facts that would lead a reasonable professional to believe fraud occurred, not on a minimum loss amount. Planning hypotheses do not prove intent, and examiners should not state opinions on guilt or intent in reports. Interview order follows the general practice of moving from neutral third parties toward the suspect, not from concealment analysis.
Key concept: the fraud theory approach and using concealment methods to target evidence.

Planning and Conducting a Fraud Examination

CFE - Planning and Conducting a Fraud Examination Example Questions

Question 1

Question 2

Question 3

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