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CFCI Study Guide Questions With Complete Answers.
Question 1: What are the three broad categories of detailed fraud
auditing responses?
CORRECT 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.
Question 2: Qualitative Standards of CIGIE
CORRECT ANSWER : 1. Planning 2. Executing investigations
- Reporting 4. Managing investigative findings.
Question 3: Evidence is categorized as
CORRECT ANSWER : - "real evidence" (any specific physical
object such as an invoice); - "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
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others testifying in court). Sometimes evidence may consist of all three—real, demonstrative, and testimonial
Question 4: Fraud Risk Assessment includes the following steps
CORRECT 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
Question 5: There are three main categories of materiality in a
FRA
CORRECT ANSWER : 1. Inconsequential 2. More than
inconsequential 3. Material
Question 6: Ultimate goal of a FRA
CORRECT 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
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management in formulating and/or adjusting its anti-fraud controls to reduce the risk of fraud.
Question 7: Approaches to FRAs will differ from organization
to organization, but most FRAs focus on identifying fraud risks
in six key categories:
CORRECT 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
Question 8: FRA step 3: Analyze the Likelihood of Each Scheme or Scenario Occurring International auditing standards
specify four risk levels:
CORRECT ANSWER : 1. Remote 2. More than remote 3.
Reasonably possible 4. Probable
Question 9: FACTA Red Flags List of Suggested Alerts,
Notifications or Warnings from a Consumer Reporting Agency
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CORRECT 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
Question 10: 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) 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, responding to its findings requires the auditor to adjust the timing, nature, and extent of