Certified Fraud Examiner (CFE) Exam
Questions With Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A |
Instant Download Pdf
1. Which of the following is the most common type of occupational
fraud?
A. Corruption
B. Asset misappropriation
C. Financial statement fraud
D. Bribery
B. Asset misappropriation
Asset misappropriation involves employees stealing or misusing an
organization's resources and is the most frequently observed type
of occupational fraud.
2. Which law primarily governs the reporting of financial statements
to the public in the United States?
A. Sarbanes-Oxley Act
B. Securities Act of 1933
C. Securities Exchange Act of 1934
D. Dodd-Frank Act
C. Securities Exchange Act of 1934
This act regulates the trading of securities and requires companies
to disclose financial information to prevent fraud.
,3. Fraud risk assessment is a key component of:
A. Internal auditing
B. Fraud prevention
C. Both A and B
D. External auditing only
C. Both A and B
Effective fraud risk assessment helps both auditors and
organizations identify vulnerabilities and prevent fraud.
4. The “fraud triangle” includes which three elements?
A. Motive, opportunity, rationalization
B. Pressure, greed, deception
C. Intent, concealment, gain
D. Risk, reward, rationalization
A. Motive, opportunity, rationalization
The fraud triangle explains why individuals commit fraud: they feel
pressure, see an opportunity, and can rationalize the act.
5. Which of the following is an example of corruption?
A. Skimming cash from sales
B. Payroll fraud
C. Bribery of a government official
D. Financial statement manipulation
C. Bribery of a government official
Corruption involves the misuse of influence in a business
transaction for personal gain.
6. In fraud investigations, which method is most commonly used to
detect asset misappropriation?
A. Background checks
, B. Analytical procedures
C. Surveillance
D. Employee interviews
B. Analytical procedures
Analytical procedures help identify unusual trends or anomalies in
financial data that may indicate misappropriation.
7. Which type of fraud typically results in the largest financial losses
to organizations?
A. Corruption
B. Financial statement fraud
C. Asset misappropriation
D. Payroll fraud
B. Financial statement fraud
Though less frequent, financial statement fraud tends to involve
higher dollar amounts, often in millions.
8. Which is considered a red flag for billing fraud?
A. Duplicate payments
B. Overdue invoices
C. Missing purchase orders
D. Excessive refunds
A. Duplicate payments
Duplicate payments can indicate fraudulent billing schemes or
internal control weaknesses.
9. Fraudulent financial reporting is often motivated by:
A. Personal greed
B. Meeting financial targets
C. Lack of internal controls
, D. Employee pressure
B. Meeting financial targets
Companies or executives may manipulate financial statements to
meet expectations or secure bonuses.
10. Which of the following is a common technique for
committing financial statement fraud?
A. Lapping
B. Skimming
C. Overstating revenues
D. Payroll padding
C. Overstating revenues
Overstating revenues inflates profits, misleading investors and
stakeholders.
11. A key preventive control against fraud includes:
A. Strong internal controls
B. External audit only
C. Surveillance cameras
D. Anonymous tips
A. Strong internal controls
Internal controls like segregation of duties reduce opportunities for
fraud.
12. Which federal agency investigates white-collar crime in the
United States?
A. IRS
B. FBI
C. SEC
D. FTC
Questions With Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A |
Instant Download Pdf
1. Which of the following is the most common type of occupational
fraud?
A. Corruption
B. Asset misappropriation
C. Financial statement fraud
D. Bribery
B. Asset misappropriation
Asset misappropriation involves employees stealing or misusing an
organization's resources and is the most frequently observed type
of occupational fraud.
2. Which law primarily governs the reporting of financial statements
to the public in the United States?
A. Sarbanes-Oxley Act
B. Securities Act of 1933
C. Securities Exchange Act of 1934
D. Dodd-Frank Act
C. Securities Exchange Act of 1934
This act regulates the trading of securities and requires companies
to disclose financial information to prevent fraud.
,3. Fraud risk assessment is a key component of:
A. Internal auditing
B. Fraud prevention
C. Both A and B
D. External auditing only
C. Both A and B
Effective fraud risk assessment helps both auditors and
organizations identify vulnerabilities and prevent fraud.
4. The “fraud triangle” includes which three elements?
A. Motive, opportunity, rationalization
B. Pressure, greed, deception
C. Intent, concealment, gain
D. Risk, reward, rationalization
A. Motive, opportunity, rationalization
The fraud triangle explains why individuals commit fraud: they feel
pressure, see an opportunity, and can rationalize the act.
5. Which of the following is an example of corruption?
A. Skimming cash from sales
B. Payroll fraud
C. Bribery of a government official
D. Financial statement manipulation
C. Bribery of a government official
Corruption involves the misuse of influence in a business
transaction for personal gain.
6. In fraud investigations, which method is most commonly used to
detect asset misappropriation?
A. Background checks
, B. Analytical procedures
C. Surveillance
D. Employee interviews
B. Analytical procedures
Analytical procedures help identify unusual trends or anomalies in
financial data that may indicate misappropriation.
7. Which type of fraud typically results in the largest financial losses
to organizations?
A. Corruption
B. Financial statement fraud
C. Asset misappropriation
D. Payroll fraud
B. Financial statement fraud
Though less frequent, financial statement fraud tends to involve
higher dollar amounts, often in millions.
8. Which is considered a red flag for billing fraud?
A. Duplicate payments
B. Overdue invoices
C. Missing purchase orders
D. Excessive refunds
A. Duplicate payments
Duplicate payments can indicate fraudulent billing schemes or
internal control weaknesses.
9. Fraudulent financial reporting is often motivated by:
A. Personal greed
B. Meeting financial targets
C. Lack of internal controls
, D. Employee pressure
B. Meeting financial targets
Companies or executives may manipulate financial statements to
meet expectations or secure bonuses.
10. Which of the following is a common technique for
committing financial statement fraud?
A. Lapping
B. Skimming
C. Overstating revenues
D. Payroll padding
C. Overstating revenues
Overstating revenues inflates profits, misleading investors and
stakeholders.
11. A key preventive control against fraud includes:
A. Strong internal controls
B. External audit only
C. Surveillance cameras
D. Anonymous tips
A. Strong internal controls
Internal controls like segregation of duties reduce opportunities for
fraud.
12. Which federal agency investigates white-collar crime in the
United States?
A. IRS
B. FBI
C. SEC
D. FTC
