COSO-FRM COSO Fraud Risk Management Certificate Program Practice Questions
Prepare for COSO-FRM with more than an answer.
- Exam fee
- $799 USD
- Level
- Certificate (Intermediate)
- Valid for
- Lifetime - does not expire
Domains covered on the exam 7
- Introduction to Fraud Risk Management14%
- Fraud Risk Governance15%
- Fraud Risk Assessment18%
- Fraud Control Activities18%
- Fraud Investigation and Corrective Action14%
- Managing and Monitoring the Fraud Risk Management Program14%
- Leveraging Tools for Fraud Risk Management7%
- 1
True or False: Under Principle 1 (Fraud Risk Governance), the Board of Directors is solely responsible for the day-to-day design and implementation of the organization's Fraud Risk Management Program.
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Correct answer: B
This is False. While the Board of Directors provides crucial oversight, establishes expectations, and assesses the risk of management override, it is Senior Management that has the overall responsibility for the day-to-day design, implementation, and execution of the Fraud Risk Management Program.
- 2
A mid-sized financial institution has a charismatic CEO who frequently speaks about the importance of ethics and integrity in company town halls. However, the internal audit team notes that there are no formal, documented procedures for reporting fraud, and the code of conduct has not been updated in ten years.
According to COSO Fraud Risk Management principles, what is the primary deficiency in this organization's governance approach?
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Correct answer: C
A common pitfall in fraud risk governance is relying solely on 'tone at the top' (such as speeches about ethics) without implementing actual procedures, updated codes of conduct, and formal enforcement mechanisms. True governance requires a visible, rigorous framework to operationalize those ethical expectations.
- 3
When distinguishing between fraud and an organizational error, which of the following elements serves as the primary differentiator according to the COSO Fraud Risk Management Guide?
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Correct answer: C
According to the practical definition used in the COSO Fraud Risk Management Guide, fraud is distinguished from error primarily by intent. Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain. Errors, regardless of their financial impact or the organizational level at which they occur, lack this intentional element of deception.
- 4
True or False: Principle 8 of the COSO 2013 Internal Control Framework explicitly requires organizations to consider the potential for fraud in assessing risks to the achievement of objectives.
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Correct answer: A
This is True. Principle 8 of the COSO 2013 Internal Control - Integrated Framework specifically states that 'The organization considers the potential for fraud in assessing risks to the achievement of objectives.' This serves as the foundational bridge between general internal controls and specific fraud risk management.
