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ACFE CFE-Law Certified Fraud Examiner (CFE) - Law Exam Practice Test

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Total 158 questions

Certified Fraud Examiner (CFE) - Law Questions and Answers

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Question 1

In jurisdictions that allow for corporate criminal liability which of the following is typically required for the corporation to be vicariously liable for the acts of one of its employees?

Options:

A.

Management was directly involved with the offense

B.

Management knew of the underlying offense but did not correct it

C.

The corporation had previous violations of a similar nature

D.

The employee was acting within the scope of their employment

Question 2

In most civil law jurisdictions which of the following BEST describes when a party is required to begin taking steps to preserve and produce relevant evidence?

Options:

A.

When the court orders such steps to be taken

B.

When litigation has started

C.

When the party receives a service of process

D.

When the charging documents are filed

Question 3

Which of the following statements about the International Organization of Securities Commissions (IOSCO) s TRUE?

Options:

A.

IOSCO is a self-regulatory organization for companies that have securities traded on international securities markets

B.

IOSCO provides a forum for regular cooperation on banking supervisory matters affecting developing nations

C.

IOSCO is an oversight body responsible for issuing and enforcing regulations that govern all international securities markets

D.

IOSCO is recognized as the international standard-setter for securities markets

Question 4

Which of the following scenarios is an example of the criminal sanction known as criminal forfeiture?

Options:

A.

As part of his sentence for embezzlement, a defendant is ordered to pay back his employer for the money he stole.

B.

As part of her sentence for bribery a defendant is ordered to transfer a car she received as a bribe to the government

C.

As part of her sentence for money laundering a defendant is sentenced to a three- to five-year term of incarceration

D.

As part of his sentence for tax evasion, a Defendant is ordered to pay a fine of $10,000 to the government

Question 5

Which of the following is TRUE in regard to authenticating evidence in most common law systems?

Options:

A.

Digital records cannot be authenticated by testimony from a witness with personal knowledge

B.

For evidence to be authenticated it must be reviewed and voted on by a jury

C.

Exhibits that cannot be authenticated will not be admitted regardless of relevance

D.

The purpose of authentication is to ensure that hearsay is not admitted into evidence

Question 6

Company A used Company B to recover damages for the breach of a contract. In the same proceeding. Company B sought damages for an allegation that Company A fraudulently induced Company B into entering the contract. In this case, what would Company B's claim against Company A be called?

Options:

A.

Counterclaim

B.

Collateral attack

C.

Reversal

D.

Cross-claim

Question 7

Which of the following is one of the three basic options by which organizations can legitimize cross-border transfers of personal information?

Options:

A.

Use a third-party transferring service

B.

Obtain approval from a Certified Information Privacy Professional (C PP)

C.

Establish a contract between the entities exchanging the information

D.

Obtain a warrant granting permission to transfer the data

Question 8

In most common law jurisdictions, which of the following BEST describes when the duty to preserve evidence begins?

Options:

A.

When litigation is reasonably anticipated

B.

When the company receives notice of the lawsuit

C.

When the judge sets the schedule for discovery

D.

When the court orders the party to produce the evidence

Question 9

Allison works for a government contractor She informs the government that her employer has been submitting false claims to the government for payment Later it is discovered that Allison has misappropriated more than $50,000 of her employer's money Alison qualifies as a whistleblower entitled to anti-retaliation protection under the law because of her report to the government Which of the following statements about Allison is CORRECT?

Options:

A.

Allison cannot be fired for misappropriating funds from her employer

B.

Allison cannot be fired for any reason

C.

Alison cannot be fired for informing the government of her employee’s fraud

D.

None of the above

Question 10

Antonio is investigating Sam on behalf of their employer, XYZ Company. During the investigation, Antonio tells a group of their coworkers who are not involved in the investigation that he discovered Sam has a serious gambling addiction, which is true. Assuming that their jurisdiction has civil laws for all of the following causes of action, which one would give Sam the BEST chance for success if he decides to bring a civil action against Antonio?

Options:

A.

Public disclosure of private facts

B.

Negligent misrepresentation

C.

Slander

D.

Defamation

Question 11

One of the purposes of securities regulation is to promote an active and competitive market.

Options:

A.

True

B.

False

Question 12

XYZ Company sued Faith to recover damages based on a claim of misappropriation of funds. In the same civil proceeding, Faith sued XYZ for false imprisonment that allegedly occurred during an interview. In this situation, the claim by Faith against XYZ Company can BEST be described as a:

Options:

A.

Reverse action

B.

Parallel proceeding

C.

Counterclaim

D.

Cross-claim

Question 13

Which of the following is the MOST ACCURATE statement about the different types of alternative dispute resolution'?

Options:

A.

The agreements reached in mediations are generally nonbinding.

B.

In a mediation session, the mediator decides who should win the dispute at issue

C.

The decisions reached in all arbitrations are always binding

D.

In an arbitration proceeding the arbitrator acts as a judge or jury by deciding the dispute at issue on its merits

Question 14

Which of the following statements about the different types of alternative dispute resolutions is CORRECT?

Options:

A.

In a mediation session, the mediator tries to help the parties reach a settlement.

B.

In an arbitration proceeding, the arbitrator tries to help the parties reach a settlement.

C.

In an arbitration proceeding that is nonbinding, issues are final and cannot later be determined by a court in a trial.

D.

In a mediation session, the mediator decides the outcome of a case by deciding who should win the dispute.

Question 15

In most civil law systems, which of the following parties typically serves as the fact finder in criminal proceedings?

Options:

A.

judge

B.

A jury

C.

A panel comprised of laypersons

D.

A panel of court-appointed attorneys

Question 16

Which of the following typically does NOT have to be present for communications between an attorney and the attorney's client to be protected by a legal professional privilege?

Options:

A.

Purpose of the communications was to seek or provide legal advice

B.

A lawsuit has been filed

C.

Intent to keep the communications confidential

D.

Communication between a legal advisor and a client

Question 17

Grant, a fraud examiner is investigating Beatrice for embezzlement on his employer's behalf. During his investigation. Grant learns that Beatrice has cheated on her spouse and he tells several of Beatrice's coworkers about it Beatrice discovers that Grant revealed the unflattering (albeit true) information about her and decides to file a claim of defamation against Grant. Which of the following is the BEST explanation of why Beatrice will not win her defamation case?

Options:

A.

The information was true

B.

The communications to the subject's coworkers were privileged

C.

The news was not communicated to enough people

D.

The statement was not printed and distributed

Question 18

Even if a government agent obtains consent to search by force duress or bribery, the consent will still constitute a valid waiver of the consenting party's right to be free from searches.

Options:

A.

true

B.

False

Question 19

Each of the following is a common legal defense for tax evasion EXCEPT:

Options:

A.

The taxpayer relied on an attorney or accountant.

B.

The taxpayer has filed for bankruptcy.

C.

The taxpayer has a mental illness.

D.

There is no tax deficiency.

Question 20

Management at ABC Org. suspects that Marcia, an employee in charge of negotiating vendor contracts, has a conflict of interest. For ABC Org.'s conflict-of-interest claim to be actionable, which of the following scenarios must be TRUE?

Options:

A.

The alleged conflict must have resulted in a direct personal benefit for Marcia.

B.

Marcia must have failed to disclose that she had a personal or economic interest in a matter that could influence her professional role.

C.

Marcia must have informed the organization that she had a connection to one or more of the vendors with whom she was negotiating.

D.

The alleged conflict must have resulted in a financial loss for the organization.

Question 21

A business files for bankruptcy with the goal of obtaining relief from creditors so that it can rearrange its financial affairs and continue as a going concern. Which of the following describes this type of bankruptcy proceeding?

Options:

A.

Reorganization bankruptcy

B.

Debt adjustment bankruptcy

C.

Debt dismissal bankruptcy

D.

Liquidation bankruptcy

Question 22

Which of the following statements concerning digital currencies, such as bitcoin, is MOST ACCURATE?

Options:

A.

Digital currencies are subject to all of the same regulations as payments made through traditional financial institutions

B.

Digital currencies are attractive to money launderers because payments often cross jurisdictional boundaries, making it difficult for authorities to pursue enforcement

C.

Digital currencies are attractive to money launderers because they are a payment method that provides complete anonymity

D.

Digital currencies are not typically used to launder money due to strict customer identification or recordkeeping requirements enforced in all jurisdictions

Question 23

IBC Manufacturing is a private company in a jurisdiction in which the public has the legal right to be free from unreasonable search and seizure by government authorities. An investigator at IBC searches the desk of Denise an IBC employee and finds illegal narcotics. The investigator seizes the narcotics and turns them over to members of law enforcement. The investigator violated Denises rights by failing to obtain a search warrant before conducting the search

Options:

A.

True

B.

False

Question 24

Which of the following statements concerning alternative remittance systems is INCORRECT?

Options:

A.

The systems are not necessarily illegal.

B.

Funds are sent and received without the use of traditional financial institutions.

C.

The systems are characterized by a lack of physical or digital transfer of currency between payers and payees.

D.

The ledgers used typically contain information regarding payers and payees, such as names and account numbers.

Question 25

Which of the following statements concerning fact finders in criminal trials in common law jurisdictions is MOST ACCURATE?

Options:

A.

The presence of a jury is always required to make factual findings in a common law criminal trial

B.

A panel of a professional judge and lay judges usually serves as the fact finder in serious cases

C.

A judge is typically responsible for factual findings

D.

Juries usually serve as the fact finder in serious cases

Question 26

Cory has been charged with lax evasion for filing a false tax return. As a defense, Cory claims that he made an honest mistake due to the tax law's complexity, and he did not intentionally submit an incorrect tax return If the court finds that his mistake was in good faith the most likely will NOT be found to have "willfully'" engaged m fraudulent actions to avoid reporting or paying his taxes.

Options:

A.

True

B.

False

Question 27

Which of the following statements regarding using front businesses as a method of laundering money is MOST ACCURATE?

Options:

A.

Front businesses are a favored method because it is easy to match the costs associated with providing customers food, liquor, and entertainment with the revenues produced.

B.

Bars, restaurants, and nightclubs are commonly used as front businesses because these venues tend to charge relatively low prices and customers rarely vary in their purchases.

C.

Front businesses can often be detected because these businesses have a large number of customers during peak operating hours and high income.

D.

A front business that conducts legitimate business can provide cover for delivery and transportation related to illegal activity.

Question 28

The Financial Action Task Force (FATF) Recommendations advise countries to do all of the following EXCEPT:

Options:

A.

Use a risk-based approach when setting anti-money laundering policies

B.

Require financial institutions to keep certain records and establish anti-money laundering policies.

C.

Require financial institutions to monitor their customers' political affiliations.

D.

Enable authorities to trace freeze, and confiscate assets suspected in money laundering and terrorist financing

Question 29

Which of the following is NOT a right of the accused under the United Nations' (UN) International Covenant on Civil and Political Rights (ICCPR)?

Options:

A.

Right of the accused to be informed of criminal charges

B.

Right to be presumed innocent until proven guilty

C.

Right to a trial by jury

D.

Freedom from arbitrary arrests

Question 30

Which of the following is the MOST ACCURATE statement about rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies?

Options:

A.

A suitability violation occurs when a broker does not carry out a trade requested by or promised to a customer

B.

A suitability violation occurs when a broker recommends an investment or investment strategy that is inconsistent with the client's objectives

C.

A suitability violation occurs when a broker trades in a client's account without obtaining prior approval for making the transaction(s).

D.

A suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions

Question 31

Which of the following is a legal element that the government must show to prove a conspiracy claim?

Options:

A.

All of the conspirators knowingly committed an overt act in furtherance of the conspiracy.

B.

The defendant entered into an agreement to commit an illegal act with at least one other person.

C.

The conspirators accomplished the purpose of the conspiracy that was initially established.

D.

The defendant intentionally or unintentionally joined and participated in the illegal scheme.

Question 32

Company A sued Company B to recover damages tor the breach of a contract. In the same proceeding Company B sought damages for an allegation that Company A fraudulently induced Company B into entering the contract In this case what would Company B's claim against Company A be called?

Options:

A.

Cross-claim

B.

Collateral attack

C.

Reversal

D.

Counterclaim

Question 33

In common law jurisdictions failing to suspend routine destruction of electronic data can result in sanctions for failure to preserve relevant evidence

Options:

A.

True

B.

False

Question 34

Tatiana is the chief executive officer (CEO) of Mattress World Warehouse, a retail mattress store that has been struggling financially A week before Mattress World Warehouse files for bankruptcy Tatiana sets ten mattresses to her husband at 80% below market value Which type of fraud scheme has Tatiana MOST LIKELY committed?

Options:

A.

A fraudulent bankruptcy

B.

A fraudulent conveyance

C.

A planned bustout

D.

A concealed transfer

Question 35

Countries A and B both follow the Financial Action Task Force (FATF) Recommendations concerning cross-border transfers of currency Trevor is traveling from Country A to Country B while carrying $16,000 in cash which exceeds Country B's reporting threshold Trevor is required to disclose the amount of currency he is carrying to authorities in Country B.

Options:

A.

True

B.

False

Question 36

During an internal investigation Todd a Certified Fraud Examiner (CFE) interviewed Janessa a fraud suspect Although Janessa wanted to leave in the middle of the interview, Todd blocked the exit and prevented her from leaving Janessa subsequently confessed to committing fraud If under these facts Janessa files a lawsuit (or false imprisonment against Todd, Todd will likely

Options:

A.

Win the case because he is protected under the qualified business privilege

B.

Lose the case if a trier of fact concludes that he restrained Janessa without consent or legal justification

C.

Lose the case because janessa did not leave the interview

D.

Win the case if he did not know the conduct was illegal

Question 37

The Financial Action Task Force (FATF) Recommendations concerning cross-border transfers of currency recommend that countries do which of the following?

Options:

A.

Require individuals to make a disclosure any time currency is physically transported into or out of a country, regardless of the currency amount.

B.

Eliminate the practice of carrying currency above a certain threshold across international borders.

C.

Establish reporting thresholds for physically carrying currency or currency equivalents into or out of a country.

D.

Stipulate that financial institutions must inform authorities any time they conduct a transaction involving a cash equivalent originating from another country.

Question 38

Which of the following examples of judicial systems would BEST be described as a civil law system?

Options:

A.

The courts are allowed to consider both codified statutes and previous court decisions but are bound by neither

B.

The courts are bound by both previous court decisions and codified principles or statutes

C.

The courts are bound primarily by previous court decisions to reserve legal issues

D.

The courts are bound by codified principles or statures but are not bound by previous court decisions

Question 39

Which of the following is a method of disguising money acquired from illegal sources by recording more income on a business's books than the business actually generates?

Options:

A.

Overstating revenues

B.

Reporting real estate purchases

C.

Recording but not depositing revenue

D.

None of the above

Question 40

Which of the following is NOT an element generally required to establish a claim alleging the common law avil wrong for intentional infliction of emotional distress?

Options:

A.

The defendant acted intentionally or recklessly

B.

The victim was an employee of the defendant

C.

The victim suffered distress as a result of the defendants conduct

D.

The defendant engaged in extreme and outrageous conduct

Question 41

Which of the following is MOST LIKELY to affect the rights that an employee may have during an internal investigation?

Options:

A.

The likelihood that the case will eventually go to trial.

B.

The existence of a collective bargaining agreement.

C.

The amount of evidence that the employer possesses.

D.

The length of the employee's tenure at the organization.

Question 42

Which of the following is NOT required for a contract transaction or scheme to be classified as an investment contract?

Options:

A.

The expectation of making a profit

B.

Profits derived solely from the investor's management activity

C.

investment m a common enterprise

D.

An investment of money or other asset

Question 43

In common law jurisdictions, which of the following scenarios would MOST LIKELY result in sanctions for an organization for failing to preserve evidence?

Options:

A.

An employee intentionally destroys a relevant document prior to the company announcing the possibility of litigation.

B.

An employee unintentionally alters a digital document that is not directly relevant to any potential litigation that the company has announced to its staff.

C.

An employee accidentally deletes a digital document that is relevant to litigation after the company announces that such litigation is a possibility.

D.

An employee abstains from destroying a document relevant to an ongoing proceeding even though this act violates the company's document retention policy.

Question 44

Which of the following is NOT a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts?

Options:

A.

The victim relied on the misrepresentation

B.

The defendant acted negligently

C.

The defendant made a false statement (i, e., a misrepresentation of fact)

D.

The victim suffered damages as a result of the misrepresentation

Question 45

Ramona is investigating Eugene for misconduct Ramona and Eugene both work for Elek-Tek, which operates in a jurisdiction with evil laws for defamation, invasion of privacy and conflict of interest During the investigation Ramona obtained ^formation that Eugene is cheating on his spouse Ramona to a large group of Elek-Tek employees that Eugene was committing adultery, which turned out to be true Which cause of action would give Eugene the BEST chance for success m a civil suit against Ramona?

Options:

A.

Conflict of interest

B.

Defamation

C.

Public disclosure of private facts

D.

Slander

Question 46

Greta is convicted of white-collar crime. However, her sentence is suspended in return for her promise of good behavior. Which of the following BEST describes Greta's sentence?

Options:

A.

Determinate sentence

B.

Probation

C.

indeterminate sentence

D.

Deferred prosecution agreement

Question 47

Raj is an employee who works in a jurisdiction that prohibits unreasonable workplace searches and surveillance in areas or items where employees have a reasonable expectation of privacy. In which of the following is Raj MOST LIKELY to have a reasonable expectation of privacy?

Options:

A.

A backpack brought from home

B.

A filing cabinet in the office lobby

C.

A waste bin m the employee's office

D.

A company-issued tablet computer

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Total 158 questions