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

Which of the following statements describes a best practice for preventing procurement fraud?
D) Companies should implement vendor-monitoring procedures that address the red flags of the vendor schemes that pose the greatest risk.
A) Companies should assign the responsibility of approving invoice payments to the person who maintains the vendor master file so discrepancies can be better identified.
B) Companies should conduct background checks on vendors after they have been added to the company's vendor master file.
C) Companies 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.

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

Actual exam question for ACFE's CFE-Fraud-Schemes-and-Financial-Crimes exam
Question #: 1
Topic #: 2
[All CFE-Fraud-Schemes-and-Financial-Crimes Questions]

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

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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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by Hermila at Jun 29, 2026, 04:38 PM

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Alisha
4 days ago
Background checks in B are important too, but not enough.
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Goldie
9 days ago
True, Charlie. D is safer for preventing fraud.
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Berry
15 days ago
Option A seems risky. Too much power in one person's hands.
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Cordelia
20 days ago
I agree, D makes sense. Red flags need attention.
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Tonette
25 days ago
I think option D is the best. Monitoring is crucial.
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Kirby
1 month ago
Totally agree with D! Red flags need constant attention.
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Casey
1 month ago
Wait, limiting audits to once a year? That sounds like a recipe for disaster!
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Dell
1 month ago
B seems risky. Shouldn't checks be done before adding vendors?
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Matt
2 months ago
A is a bad idea. Too much power in one person's hands!
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Lili
2 months ago
Definitely D! Monitoring vendors is key to spotting fraud.
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Gianna
2 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.
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Gearldine
2 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.
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Theron
2 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.
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Ling
2 months ago
I think option D sounds familiar; I remember discussing vendor-monitoring procedures in class as a key strategy against fraud.
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