ACFE CFE-Investigation - Certified Fraud Examiner (CFE) - Investigation

TheFraud Examiners Manualnotes that EU privacy laws (e.g., EU Data Protection Directive, precursor to GDPR) restrict or prohibit the transfer of personal data to non-EU countries without compliance:

“Many foreign countries—and those in the European Union (EU) in particular—restrict or prohibit processing and transferring personal data… The EU’s directive… places limits on transmitting personal data to non-EU countries”.

Thus, since the fraud examiner is handling data about an EU-based employee, GDPR compliance is required, even if the examiner is outside the EU.

When preparing for interviews, fraud examiners should avoid scripting detailed questions. Instead, they prepare notes of key points to cover.

From the Fraud Examiners Manual:

“Whenever possible, do not prepare a list of predetermined questions to ask the subject. The interview should flow freely. The interviewer might, however, want to develop alist of key points to coverduring the interview”.

Therefore, the best preparation method is to note key points instead of detailed questions.

TheFraud Examiners Manualemphasizes that before commencing legal action to recover assets, the examiner must consider whether the defendant has assets worth pursuing:

“The most important question a fraud examiner should ask before beginning legal action to recover assets is whether the defendant has sufficient property or money to satisfy a judgment. Legal actions can be time-consuming and costly, and recovery efforts are futile if the defendant is judgment-proof.”

Before commencing legal action to recover assets, themost critical considerationis whether the defendant hasrecoverable assets. If the defendant lacks property or funds, pursuing legal action could be costly and ultimately fruitless.

From the2014 International Fraud Examiners Manual:

“After a fraud is discovered, fraud examiners might need to assist in making a recommendation concerning the recovery of lost assets… A domestic judgment against a foreign defendant is usually helpful for recovering the defendant’s assets located in the domestic country, but might be worthless for obtaining the defendant’s assets in a foreign country.”

This emphasizes that enforcement of judgments is only meaningful if assets exist to satisfy them.

Similarly, theCFE Prep - Investigationsmaterial highlights asset tracing and recovery as the foundation for deciding legal action:

“Records obtained from financial institutions are perhaps the single most important financial source available to fraud examiners for purposes of tracing assets.”

📌Interpretation of Answer Choices:

A. Prior arrests→ Not directly relevant to whether asset recovery will succeed.

C. Statute of limitations→ Important for legal viability, but meaningless if no assets exist to recover.

D. Guilt of the suspect→ Guilt must be established in criminal cases, but in civil recovery,asset availability is paramount.

B. Defendant’s property or money→ This is themost importantpractical question, because without assets, recovery efforts will not yield compensation regardless of guilt or legal timelines.

The recommended questioning order is:

“As a general rule, questioning should proceed from thegeneral to the specific; that is, it is best to seek general information before seeking details”.

This ensures the respondent provides a free narrative before narrowing down to specifics.

According to theCFE Prep - Investigationsstudy guide:

“It is recommended that any witnesses who are considered potentially volatile be interviewed without advance notice. Surprise should be employed in any interview that is considered potentially volatile. In many instances, the potentially volatile respondent is unaware that he is going to be questioned, and will therefore be unprepared. If the interview is not conducted by surprise, the interviewer runs the risk of the respondent not showing up, showing up with a witness, or being present with counsel. A target’s friends, relatives, and romantic interests often make for a difficult interview. They perceive that the fraud examiner is deliberately targeting someone close to them.”

📌Interpretation for this scenario:

Brianna is described asvery protective of her boyfriend, making her a potentiallyvolatile witness.

Best practice is to avoid giving heradvance notice(which might increase hostility, resentment, or allow preparation).

Conducting the interviewwith little or no noticereduces the risk of interference, ensures she is unprepared, and prevents her from appearing with legal counsel or allies.

Explanation with Extracts= Predication requires sufficient circumstances to suggest fraud. TheCFE Prep Guideexplains:

“Fraud examiners should not investigate beyond the available predication… There is insufficient predication to confront Wallace or to make any direct allegations about fraud, but Carter does have adequate predication to make discreet inquiries”.Similarly, Arnold may discreetly inquire but not accuse or search property without further evidence.

The recommended questioning order is:

“As a general rule, questioning should proceed from thegeneral to the specific; that is, it is best to seek general information before seeking details”.

This ensures the respondent provides a free narrative before narrowing down to specifics.

The2014 International Fraud Examiners Manualprovides examples of data analysis for accounts payable:

“Examples of data analysis queries that can be performed to help detect fraud through examination of accounts payable include:

• Audit paid invoices for manual comparison with actual invoices.

•Summarise large invoices by amount, vendor, etc.

• Identify debits to expense accounts outside of set default accounts.

• Reconcile cheque registers to disbursements by vendor invoice.”

While other functions apply to payroll or asset management, themost effective function for accounts payablefraud detection is tosummarize large invoices by amount and vendor.

Detailed Explanation with Extracts= The Fraud Examiners Manual states:

“When reporting the results of a fraud examination, it is best to include copies (not originals) of important documents in the formal report”.

Originals should be safeguarded separately for evidence; reports should use copies.

Therefore, the statement is true.