ACFE CFE - Law (Certified Fraud Examiner - Law) Practice Test 11

Question 100

A director openly exceeds explicit legal limits on a company's constitutional powers. Which question should counsel analyze?

  1. Ratification
  2. Apparent authority
  3. Corporate authority limitation
  4. Actual authority

Explanation

Correct Answer

C:

A corporation's binding capacity and the authority of its officers depend on applicable corporate law and rules protecting third parties.

Incorrect Answers

A:

A principal may adopt an agent's otherwise unauthorized act through legally sufficient informed conduct, subject to required formalities; corporate authority limitation is the issue raised by the described conduct.

B:

A principal's manifestations can create authority as perceived reasonably by a third party, not merely an agent's unsupported claim; the inquiry instead concerns Corporate authority limitation, with its own elements.

D:

Actual authority arises from the principal's agreement and manifestations to the agent, including the scope of the delegated task; the relevant step in this scenario is Corporate authority limitation.

Question 101

An American-listed manufacturer discovers that its overseas sales agent gave an unlawful benefit to a government hospital purchasing officer. (1) Counsel assesses the corrupt payment offered to secure orders; which FCPA prohibition is implicated, assuming jurisdictional elements are met? (2) The same issuer describes the payment in its ledger as routine customer training; which issuer accounting obligation independently requires accurate recording? Choose the TWO applicable FCPA provisions. Choose TWO.

  1. FCPA anti-bribery provisions
  2. FCPA territorial reach
  3. FCPA books-and-records provision
  4. FCPA internal accounting controls

Explanation

Correct Answers

A:

The Foreign Corrupt Practices Act addresses corrupt offers or transfers of value to foreign officials to influence official action in obtaining or retaining business, when its jurisdictional elements apply; it specifically answers numbered situation 1.

C:

Covered issuers must keep books and accounts that accurately and fairly reflect transactions in reasonable detail, even where a bribery charge is not established; it specifically answers numbered situation 2.

Incorrect Answers

B:

Specified foreign entities and persons may be subject to the FCPA when an act in furtherance of prohibited bribery occurs within U.S. territory; the separate questions call for fcpa anti-bribery provisions and fcpa books-and-records provision, while no prompt asks for this additional rule.

D:

The issuer accounting provisions require a sufficient system of internal accounting controls to provide reasonable assurances over authorized transactions and assets; the separate questions call for fcpa anti-bribery provisions and fcpa books-and-records provision, while no prompt asks for this additional rule.

Question 102

An issuer's controller argues that a small, intentionally disguised overseas commission need not be accurately entered because it is below the company's financial-statement materiality threshold. Which accounting standard is most directly relevant?

  1. A criminal conviction prerequisite for bookkeeping entries
  2. FCPA reasonable-detail books-and-records standard
  3. Financial-statement materiality as the sole bookkeeping threshold
  4. UK statutory adequate-procedures defense

Explanation

Correct Answer

B:

The FCPA requires issuers to maintain books that accurately and fairly reflect transactions in reasonable detail; the obligation is not limited to materially large payments.

Incorrect Answers

A:

An issuer must maintain qualifying records before and regardless of any criminal conviction for the underlying conduct.

C:

Investor-materiality analysis may matter to a disclosure claim, but the FCPA recordkeeping rule requires reasonable detail and cannot simply be equated with that disclosure threshold.

D:

That defense concerns a UK corporate failure-to-prevent-bribery offense, not the issuer's U.S. accounting-record obligation.

Question 103

A publicly traded issuer lacks reasonable approval procedures for overseas payments. Which separate FCPA obligation should be assessed?

  1. FCPA anti-bribery provisions
  2. FCPA internal accounting controls
  3. FCPA books-and-records provision
  4. FCPA territorial reach

Explanation

Correct Answer

B:

The issuer accounting provisions require a sufficient system of internal accounting controls to provide reasonable assurances over authorized transactions and assets.

Incorrect Answers

A:

The Foreign Corrupt Practices Act addresses corrupt offers or transfers of value to foreign officials to influence official action in obtaining or retaining business, when its jurisdictional elements apply; here the operative distinction is FCPA internal accounting controls.

C:

Covered issuers must keep books and accounts that accurately and fairly reflect transactions in reasonable detail, even where a bribery charge is not established; those prerequisites should not be confused with FCPA internal accounting controls.

D:

Specified foreign entities and persons may be subject to the FCPA when an act in furtherance of prohibited bribery occurs within U.S. territory; fCPA internal accounting controls addresses the distinct legal requirement stated in the facts.

Question 104

A foreign corporation makes a corrupt official payment through conduct inside U.S. territory. What jurisdictional feature of the FCPA may matter?

  1. FCPA territorial reach
  2. FCPA books-and-records provision
  3. FCPA internal accounting controls
  4. FCPA anti-bribery provisions

Explanation

Correct Answer

A:

Specified foreign entities and persons may be subject to the FCPA when an act in furtherance of prohibited bribery occurs within U.S. territory.

Incorrect Answers

B:

Covered issuers must keep books and accounts that accurately and fairly reflect transactions in reasonable detail, even where a bribery charge is not established; that concept must be distinguished from FCPA territorial reach here.

C:

The issuer accounting provisions require a sufficient system of internal accounting controls to provide reasonable assurances over authorized transactions and assets; the circumstances point to FCPA territorial reach rather than that separate test.

D:

The Foreign Corrupt Practices Act addresses corrupt offers or transfers of value to foreign officials to influence official action in obtaining or retaining business, when its jurisdictional elements apply; fCPA territorial reach is the issue raised by the described conduct.

Question 105

An employee offers a buyer a secret payment for improper performance of a business function in the United Kingdom. Which Bribery Act offense fits the giver?

  1. UK Bribery Act section 1
  2. UK Bribery Act section 7
  3. UK Bribery Act section 6
  4. UK Bribery Act section 2

Explanation

Correct Answer

A:

Section 1 prohibits offering, promising or giving a financial or other advantage with the required improper-performance connection.

Incorrect Answers

B:

Section 7 creates a failure-to-prevent-bribery offense for relevant commercial organizations, with an adequate-procedures defense available; the relevant step in this scenario is UK Bribery Act section 1.

C:

Section 6 targets bribery of foreign public officials with the specified intent to obtain or retain business or advantage, subject to statutory qualifications; here the operative distinction is UK Bribery Act section 1.

D:

Section 2 concerns requesting, agreeing to receive or accepting an advantage in circumstances involving improper performance of a relevant function; those prerequisites should not be confused with UK Bribery Act section 1.

Question 106

A procurement officer solicits a benefit to disregard bid-scoring rules. Which UK Bribery Act offense applies to the recipient?

  1. UK Bribery Act section 2
  2. UK Bribery Act section 1
  3. UK Bribery Act section 6
  4. UK Bribery Act section 7

Explanation

Correct Answer

A:

Section 2 concerns requesting, agreeing to receive or accepting an advantage in circumstances involving improper performance of a relevant function.

Incorrect Answers

B:

Section 1 prohibits offering, promising or giving a financial or other advantage with the required improper-performance connection; uK Bribery Act section 2 raises a different threshold from this alternative.

C:

Section 6 targets bribery of foreign public officials with the specified intent to obtain or retain business or advantage, subject to statutory qualifications; that concept must be distinguished from UK Bribery Act section 2 here.

D:

Section 7 creates a failure-to-prevent-bribery offense for relevant commercial organizations, with an adequate-procedures defense available; the circumstances point to UK Bribery Act section 2 rather than that separate test.

Question 107

A UK company offers a foreign official a benefit to obtain a business advantage without lawful permission. Which targeted UK offense is considered?

  1. UK Bribery Act section 2
  2. UK Bribery Act section 6
  3. UK Bribery Act section 7
  4. UK Bribery Act section 1

Explanation

Correct Answer

B:

Section 6 targets bribery of foreign public officials with the specified intent to obtain or retain business or advantage, subject to statutory qualifications.

Incorrect Answers

A:

Section 2 concerns requesting, agreeing to receive or accepting an advantage in circumstances involving improper performance of a relevant function; the inquiry instead concerns UK Bribery Act section 6, with its own elements.

C:

Section 7 creates a failure-to-prevent-bribery offense for relevant commercial organizations, with an adequate-procedures defense available; the relevant step in this scenario is UK Bribery Act section 6.

D:

Section 1 prohibits offering, promising or giving a financial or other advantage with the required improper-performance connection; here the operative distinction is UK Bribery Act section 6.

Question 108

An associated agent bribes a customer to obtain business for a commercial organization operating in the UK. Which corporate offense needs review?

  1. UK Bribery Act section 7
  2. UK Bribery Act section 6
  3. UK Bribery Act section 2
  4. UK Bribery Act section 1

Explanation

Correct Answer

A:

Section 7 creates a failure-to-prevent-bribery offense for relevant commercial organizations, with an adequate-procedures defense available.

Incorrect Answers

B:

Section 6 targets bribery of foreign public officials with the specified intent to obtain or retain business or advantage, subject to statutory qualifications; uK Bribery Act section 7 addresses the distinct legal requirement stated in the facts.

C:

Section 2 concerns requesting, agreeing to receive or accepting an advantage in circumstances involving improper performance of a relevant function; uK Bribery Act section 7 raises a different threshold from this alternative.

D:

Section 1 prohibits offering, promising or giving a financial or other advantage with the required improper-performance connection; that concept must be distinguished from UK Bribery Act section 7 here.

Question 109

A small importer's antibribery measures are designed to match its actual exposure rather than copy a multinational manual. Which UK guidance principle fits?

  1. Proportionate procedures
  2. Top-level commitment
  3. Bribery risk assessment
  4. Due diligence on associated persons

Explanation

Correct Answer

A:

Bribery prevention measures should be proportionate to the organization's particular bribery risks, scale and complexity rather than mechanically uniform.

Incorrect Answers

B:

Leadership commitment communicates a culture in which bribery is unacceptable and makes prevention a supported organizational priority; proportionate procedures is the issue raised by the described conduct.

C:

Risk assessment informs the focus and proportionality of procedures for preventing bribery, including exposures by geography and counterparty; the inquiry instead concerns Proportionate procedures, with its own elements.

D:

Risk-based diligence is directed at persons who perform services for the business to assess and mitigate bribery concerns; the relevant step in this scenario is Proportionate procedures.

Question 110

An organization maps which agents and transactions present bribery exposure before designing controls. Which UK guidance principle fits?

  1. Due diligence on associated persons
  2. Proportionate procedures
  3. Bribery risk assessment
  4. Top-level commitment

Explanation

Correct Answer

C:

Risk assessment informs the focus and proportionality of procedures for preventing bribery, including exposures by geography and counterparty.

Incorrect Answers

A:

Risk-based diligence is directed at persons who perform services for the business to assess and mitigate bribery concerns; those prerequisites should not be confused with Bribery risk assessment.

B:

Bribery prevention measures should be proportionate to the organization's particular bribery risks, scale and complexity rather than mechanically uniform; bribery risk assessment addresses the distinct legal requirement stated in the facts.

D:

Leadership commitment communicates a culture in which bribery is unacceptable and makes prevention a supported organizational priority; bribery risk assessment raises a different threshold from this alternative.

Certified Fraud Examiner - Law (CFE - Law) Practice Tests