CFE – Fraud Prevention and Deterrence — Question 63

Which of the following is TRUE regarding proactive fraud auditing procedures?

Answer options

• A. Implementing proactive fraud audit procedures demonstrates the organization's intention to aggressively look for possible fraudulent conduct.
• B. Surprise audit procedures are an effective fraud detection mechanism, but they do not help prevent fraud.
• C. Fraud assessment questioning techniques are most appropriately used when attempting to determine who might be responsible for a particular fraud scheme.
• D. Analytical review of the financial statements is best used to uncover small frauds that might be missed by other detection methods.

Correct answer: C

Explanation

Option C is correct because fraud assessment questioning techniques are specifically designed to help identify individuals who may have committed fraud. Option A is misleading as it implies a more aggressive approach than what proactive auditing typically entails. Option B incorrectly states that surprise audits do not aid in fraud prevention, as they can deter fraudulent behavior. Option D inaccurately suggests that analytical reviews are primarily for small frauds, whereas they are useful for identifying various types of anomalies.