Free CFE-Law Practice Test Questions and Answers (2026)

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Q: 1
Dodd is a Certified Fraud Examiner (CFE) who works for Weathervane, a private company Dodd suspects that Burton a Weathervane employee has embezzled money from the company Dodd plans to conduct an internal investigation into the missing funds Based on these facts which of the following is the MOST ACCURATE statement?
Options
15 comments in the community discussion
6
C . B is a trap, privacy doesn't override the typical duty to cooperate for internal matters.
3
Option C here. D trips people up, but the right to remain silent really applies with law enforcement or criminal investigations, not just internal company stuff. Pretty sure that's what ACFE expects.
Q: 2
John deliberately understated his income so that he could pay a lesser amount on his tax bill. This is an example of tax avoidance.
Options
14 comments in the community discussion
1
B. deliberate understatement is tax evasion. A is the trap here, pretty sure.
1
Its B, not A. Deliberately understating income is evasion, which a lot of people mix up with avoidance on these.
Q: 3
Which of the following is the MOST ACCURATE statement about the litigation privilege in common law jurisdictions?
Options
20 comments in the community discussion
1
C/D? Official study guide and practice exam questions both mention timing, so not totally clear to me which is best.
1
I get the confusion, but litigation privilege actually covers materials prepped for possible litigation, not just communications. So option A is closest since it's about client-lawyer stuff, though it's super similar to attorney-client privilege. Not totally sure here, but leaning A based on what I've seen.
Q: 4
Which of the following is NOT required for a contract transaction or scheme to be classified as an investment contract?
Options
15 comments in the community discussion
2
Honestly, these Howey Test questions are super repetitive in every practice-B all the way.
Had something like this in a mock, it's B.
Q: 5
Which of the following statements concerning examinations of expert witnesses in most inquisitorial jurisdictions is accurate?
Options
23 comments in the community discussion
1
I'm thinking C, since sometimes the parties decide how much weight to give the expert's testimony.
1
B
Q: 6
Smith, a Certified Fraud Examiner (CFE). works for the ABC Company, a private entity that operates w\ a jurisdiction with civil laws for defamation, invasion of privacy. and conflict of interest Smith seizes and searches the personal smartphone of Green an employee of ABC even though Green was not suspected of any wrongdong Assuming that Green had a reasonable expectation of privacy in the smartphone and Smith conducted the search without a legitmate interest or authority, under which of the following claims would Green MOST LIKELY be able to recover damages against Smith?
Options
18 comments in the community discussion
1
Its B, saw similar question in exam reports and the focus was on intrusion not disclosure.
1
B or C? I saw a similar question in the official guide, so I'd double check both.
Q: 7
Which of the following statements concerning the appointment of expert witnesses at that is accurate?
Options
17 comments in the community discussion
7
Option A
4
Not seeing it for C, option A is more accurate here. In inquisitorial jurisdictions, the court is generally the one appointing key expert witnesses, not the parties. It's easy to mix up with adversarial systems where parties select their own experts-classic trap on these questions. Pretty confident that's what they'
Q: 8
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
18 comments in the community discussion
1
A imo, D looks tempting but that's for shutting down, not keeping the business alive. Reorganization fits "continue as a going concern."
1
A, Had something like this in a mock exam last month, sticking with A here.
Q: 9
Which of the following is a red flag that an entity is operating a security business without the proper license or registration?
Options
13 comments in the community discussion
1
Option D
D tbh. Agents with criminal records shouldn't be in legit security work, that's a licensing dealbreaker in most places.
Q: 10
The________________requires that an employee act solely in the best interest of their employer, free of any serf-dealing, conflicts of interest, or other abuse that results in a personal advantage
Options
15 comments in the community discussion
2
D tbh, employee trust sounds close but that's not a defined legal duty. Main trap here!
1
D , "duty of employee trust" looks like the trap. Seen similar on other practice sets.
Q: 11
Which of the following is the MOST ACCURATE statement about the UK Bribery Act?
Options
5 comments in the community discussion
B tbh, the FCPA and UK Bribery Act have different standards. The UK's version is way stricter and doesn't allow for some things (like facilitation payments) that the FCPA does. So just being FCPA-compliant isn't enough.
B , based on what I've seen in official guides and practice tests.
Q: 12
In a particular country's judicial process, the judge oversees the investigation of a case is primarily responsible for questioning witnesses and generally plays a larger role in the evidence-gathering process than the parties' legal counsel Which of the following BEST describes this type of judicial process'?
Options
7 comments in the community discussion
Option D for me. Common law is where the judge has a big role in the process, especially in British-influenced systems. Maybe I'm missing something, but this seems to fit. Could be wrong though.
I don't think it's A. The description fits C, inquisitorial process, since the judge leads the investigation and evidence gathering, not the legal counsel. Adversarial (A) is more common law style where lawyers drive the case. Anyone see it differently?
Q: 13
Evidence that tends to make some tact at issue more or less likely than it would be without the evidence is called:
Options
4 comments in the community discussion
That describes relevant evidence. D
Q: 14
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
10 comments in the community discussion
1
C. saw a similar question in an exam review-protection only applies to her reporting, not to unrelated misconduct like theft.
1
C tbh, anti-retaliation laws only cover her whistleblowing, not other misconduct. If "best" refers to protection strictly for reporting fraud, C fits. Would it change if the question asked for "full immunity" instead?
Q: 15
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
5 comments in the community discussion
1
If the statement is true, defamation doesn't stick. A.
1
A tbh, truth is the main defense here. Defamation only applies to false statements, so even if what Grant shared was embarrassing or mean, if it's true Beatrice has no case. B is tempting since privilege sometimes helps, but that usually covers statements made as part of a legal duty or in court. Anyone disagree?
Q: 16
Alicia has been charged with tax evasion. As a defense, Alicia claims that she made an honest mistake due to the complexity of the tax law and did not intentionally violate the jurisdiction's tax laws. If the court finds that her mistake was made in good faith, then she will most likely NOT be found to have willfully engaged in fraudulent actions to avoid reporting or paying her taxes.
Options
7 comments in the community discussion
2
Nice and clear scenario here. True (A) is correct because a good faith mistake usually defeats the "willfulness" element required for tax fraud. That's generally backed by real-world cases, too.
1
A , most practice tests and official CFE manuals always highlight good faith as a valid defense to willfulness in tax cases.
Q: 17
Which of the following statements concerning examinations of expert witnesses in most inquisitorial jurisdictions is accurate?
Options
23 comments in the community discussion
1
I'm thinking C, since sometimes the parties decide how much weight to give the expert's testimony.
1
B
Q: 18
Which of the following statements regarding the qualifications of expert witnesses in most inquisitorial jurisdictions is CORRECT?
Options
7 comments in the community discussion
5
D . Official guide and practice exams tend to mention how standardized requirements apply to experts in inquisitorial systems.
2
Option D. Pretty sure inquisitorial systems use set standards for expert qualifications. Not 100% though, anyone disagree?
Q: 19
The same customer comes into a casino each day and deposits a large amount of cash into an account but after very little gambling the customer withdraws the funds The casino employees suspect that the customer may be engaged in money laundering activity Assuming that the anti- money laundering (AML) regulations that govern the casino’s activities correspond to the Financial Action Task Force (FATF) Recommendations the casino:
Options
6 comments in the community discussion
6
Option C is right here. FATF makes it clear that if staff suspect money laundering, reporting is required, not just optional. D is trying to trick you-cash transaction reports are different from suspicious activity reports.
1
Probably C, had something like this in a mock and it matched the FATF guidance.
Q: 20
Which of the following is one of the three basic options by which organizations can legitimize cross- border transfers of personal information?
Options
5 comments in the community discussion
1
B tbh, since consulting with a privacy professional seems logical for compliance. Certified professionals know the laws and could guide the transfer process. If I'm wrong, curious to hear why.
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