Discuss ACFE CFE-Fraud-Schemes-and-Financial-Crimes Exam Topic 2 Question 1

Which of the following statements describes a best practice for preventing procurement fraud?

ACompanies should assign the responsibility of approving invoice payments to the person who maintains the vendor master file so discrepancies can be better identified.

BCompanies should conduct background checks on vendors after they have been added to the company's vendor master file.

CCompanies should limit comprehensive audits of procurement activities to once a year to create a consistent data point for comparison from one year to the next.

DCompanies should implement vendor-monitoring procedures that address the red flags of the vendor schemes that pose the greatest risk.

Suggested Answer: D

The correct answer is D. Procurement fraud prevention requires ongoing vendor monitoring based on the organization's highest-risk vendor schemes. Monitoring should focus on practical red flags, such as unusual pricing, duplicate vendors, related-party indicators, excessive change orders, suspicious payment patterns, or vendors lacking proper support. Option A violates segregation of duties because the person maintaining the vendor master file should not also approve invoice payments. Option B is weak because vendor background checks should occur before vendors are added to the master file, not after. Option C is incorrect because procurement monitoring should be ongoing and risk-based, not restricted to annual reviews. The ACFE material emphasizes vendor management, vendor master file controls, and monitoring based on relevant red flags.

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23 comments · newest first

Oren 3 days ago

D addresses specific risks, very proactive.

Larae 8 days ago

C doesn't make sense. Once a year is too infrequent.

Afton 13 days ago

B is important too, but after adding? Why not before?

Owen 18 days ago

A seems risky. Too much power in one person's hands.

Carey 24 days ago

Agreed! Monitoring vendors is crucial.

Zena 29 days ago

I think D is the best choice.

Lenna 1 month ago

Exactly, Grace. Regular audits help catch issues early.

Jolene 1 month ago

Limiting audits in C is a bad idea. We need more checks.

Taryn 1 month ago

Right, Eve. D covers ongoing risks better.

Alisha 2 months ago

Background checks in B are important too, but not enough.

Goldie 2 months ago

True, Charlie. D is safer for preventing fraud.

Berry 2 months ago

Option A seems risky. Too much power in one person's hands.

Cordelia 2 months ago

I agree, D makes sense. Red flags need attention.

Tonette 2 months ago

I think option D is the best. Monitoring is crucial.

Kirby 3 months ago

Totally agree with D! Red flags need constant attention.

Casey 3 months ago

Wait, limiting audits to once a year? That sounds like a recipe for disaster!

Dell 3 months ago

B seems risky. Shouldn't checks be done before adding vendors?

Matt 3 months ago

A is a bad idea. Too much power in one person's hands!

Lili 3 months ago

Definitely D! Monitoring vendors is key to spotting fraud.

Gianna 3 months ago

Limiting audits to once a year, like in option C, seems risky. I remember we talked about more frequent audits being a better practice.

Gearldine 4 months ago

I recall a practice question about vendor checks, and I think option B might be important, but it seems a bit late in the process.

Theron 4 months ago

I'm not entirely sure, but I feel like option A could lead to conflicts of interest if the same person handles both tasks.

Ling 4 months ago

I think option D sounds familiar; I remember discussing vendor-monitoring procedures in class as a key strategy against fraud.

ACFE CFE-Fraud-Schemes-and-Financial-Crimes Exam - Topic 2 Question 1 Discussion