CFE – Fraud Prevention and Deterrence — Question 9

Which of the following is FALSE regarding the process of defining the objective of the fraud risk management program?

Answer options

• A. Management must balance the investment in anti-fraud controls with the benefit of those controls and the amount of risk it is willing to accept
• B. Management should tailor the detailed objectives of the fraud risk management program to the organization’s specific needs and goals
• C. Management should examine previous fraud occurrences to determine how the ideal fraud risk management program would have prevented them
• D. Management must assign a quantitative measure to its risk appetite so that it can accurately measure the fraud risk management program’s effectiveness

Correct answer: C

Explanation

Option C is incorrect because while examining past fraud incidents is useful, it does not necessarily define the objectives of a fraud risk management program. The other options (A, B, and D) correctly highlight the need for a balanced approach, tailored objectives, and a quantitative measure of risk appetite, all of which are essential for effective fraud risk management.