ACFE CFE - Law (Certified Fraud Examiner - Law) Practice Test 3

Question 20

Business parties agree to present an existing controversy directly to a court for judgment rather than use a private process. Which mechanism is involved?

  1. Civil litigation
  2. Mediation
  3. Arbitration
  4. Negotiated settlement

Explanation

Correct Answer

A:

Litigation asks a court to adjudicate legal rights through pleadings, evidence, judgment and possible appeals.

Incorrect Answers

B:

A mediator assists agreement but ordinarily does not decide the merits or compel settlement in the way an adjudicator can; those prerequisites should not be confused with Civil litigation.

C:

Arbitration submits disputes to a neutral adjudicator outside ordinary court trial, with enforceability and review governed by the agreement and law; civil litigation addresses the distinct legal requirement stated in the facts.

D:

A settlement reflects agreed terms that resolve claims, subject to validity and approval requirements where applicable; civil litigation raises a different threshold from this alternative.

Question 21

A dispute asks whether a national government may prosecute a transnational fraud offense under its statute. Which issue must be addressed first?

  1. Enforcement jurisdiction
  2. Territorial sovereignty
  3. Recognition of foreign judgments
  4. Prescriptive jurisdiction

Explanation

Correct Answer

D:

Prescriptive jurisdiction concerns whether a sovereign's law lawfully reaches the conduct, a question distinct from a court's practical ability to enforce abroad.

Incorrect Answers

A:

Execution of a judgment across borders usually requires local legal authority and may depend on recognition or international assistance; the circumstances point to Prescriptive jurisdiction rather than that separate test.

B:

Investigative powers generally cannot simply be exercised inside another country without lawful local authority or an applicable assistance channel; prescriptive jurisdiction is the issue raised by the described conduct.

C:

Recognition determines whether another state's adjudication will be given legal effect and is distinct from retrying all underlying allegations; the inquiry instead concerns Prescriptive jurisdiction, with its own elements.

Question 22

An overseas court issues a judgment, but property is located in another country. Which separate challenge arises?

  1. Enforcement jurisdiction
  2. Territorial sovereignty
  3. International service of process
  4. Prescriptive jurisdiction

Explanation

Correct Answer

A:

Execution of a judgment across borders usually requires local legal authority and may depend on recognition or international assistance.

Incorrect Answers

B:

Investigative powers generally cannot simply be exercised inside another country without lawful local authority or an applicable assistance channel; here the operative distinction is Enforcement jurisdiction.

C:

International service concerns valid notice to an overseas party at the outset of litigation; it does not itself authorize execution against assets after a judgment is issued in another country.

D:

Prescriptive jurisdiction concerns whether a sovereign's law lawfully reaches the conduct, a question distinct from a court's practical ability to enforce abroad; enforcement jurisdiction addresses the distinct legal requirement stated in the facts.

Question 23

A court decides whether to recognize a foreign judgment under domestic recognition law. Which concept is central?

  1. Recognition of foreign judgments
  2. Prescriptive jurisdiction
  3. Territorial sovereignty
  4. Enforcement jurisdiction

Explanation

Correct Answer

A:

Recognition determines whether another state's adjudication will be given legal effect and is distinct from retrying all underlying allegations.

Incorrect Answers

B:

Prescriptive jurisdiction concerns whether a sovereign's law lawfully reaches the conduct, a question distinct from a court's practical ability to enforce abroad; that concept must be distinguished from Recognition of foreign judgments here.

C:

Investigative powers generally cannot simply be exercised inside another country without lawful local authority or an applicable assistance channel; the circumstances point to Recognition of foreign judgments rather than that separate test.

D:

Execution of a judgment across borders usually requires local legal authority and may depend on recognition or international assistance; recognition of foreign judgments is the issue raised by the described conduct.

Question 24

Foreign investigators request records located in another sovereign's territory. What limitation drives the need for cooperation?

  1. Territorial sovereignty
  2. Recognition of foreign judgments
  3. Prescriptive jurisdiction
  4. Enforcement jurisdiction

Explanation

Correct Answer

A:

Investigative powers generally cannot simply be exercised inside another country without lawful local authority or an applicable assistance channel.

Incorrect Answers

B:

Recognition determines whether another state's adjudication will be given legal effect and is distinct from retrying all underlying allegations; the relevant step in this scenario is Territorial sovereignty.

C:

Prescriptive jurisdiction concerns whether a sovereign's law lawfully reaches the conduct, a question distinct from a court's practical ability to enforce abroad; here the operative distinction is Territorial sovereignty.

D:

Execution of a judgment across borders usually requires local legal authority and may depend on recognition or international assistance; those prerequisites should not be confused with Territorial sovereignty.

Question 25

A claimant could not reasonably discover a carefully concealed procurement kickback until a later forensic audit. The defendant invokes the ordinary filing deadline. Which doctrine should counsel examine before concluding the claim is time-barred?

  1. Claim preclusion
  2. Discovery-rule accrual or equitable tolling
  3. Venue transfer
  4. Statute of repose without an equitable tolling analysis

Explanation

Correct Answer

B:

Depending on the controlling statute and jurisdiction, delayed discovery or fraudulent concealment can alter accrual or suspend a limitations period; the dates and diligence still matter.

Incorrect Answers

A:

Preclusion depends on an earlier qualifying judgment, not on when a newly discovered wrong could have been pleaded.

C:

A change of court location addresses convenience or proper district, not the start or suspension of a limitations clock.

D:

A statute of repose can impose an outside deadline regardless of ordinary claim accrual; its interaction with discovery and fraud concealment must be examined separately, not assumed to provide tolling.

Question 26

A party alleges that a judgment conclusively resolved the same claim between the same parties. Which preclusion principle matters?

  1. Laches
  2. Claim preclusion
  3. Issue preclusion
  4. Limitation period

Explanation

Correct Answer

B:

A qualifying final judgment generally bars relitigation of the same claim between persons bound by the judgment.

Incorrect Answers

A:

Laches is an equitable defense concerning unreasonable delay and prejudice rather than a fixed statutory limitations date; the inquiry instead concerns Claim preclusion, with its own elements.

C:

Issue preclusion can prevent relitigation of an actually determined, essential issue where procedural prerequisites are met; the relevant step in this scenario is Claim preclusion.

D:

Statutes of limitation impose filing deadlines, with commencement and tolling issues governed by the applicable claim and jurisdiction; here the operative distinction is Claim preclusion.

Question 27

A party loses a contested finding about ownership in one completed lawsuit and files a different claim in which the identical, essential issue would be tried again. Which doctrine can bar a second determination of that issue, assuming its prerequisites are satisfied?

  1. Limitation period
  2. Claim preclusion
  3. Laches
  4. Issue preclusion

Explanation

Correct Answer

D:

Issue preclusion can prevent relitigation of an actually determined, essential issue where procedural prerequisites are met.

Incorrect Answers

A:

Statutes of limitation impose filing deadlines, with commencement and tolling issues governed by the applicable claim and jurisdiction; issue preclusion addresses the distinct legal requirement stated in the facts.

B:

A qualifying final judgment generally bars relitigation of the same claim between persons bound by the judgment; issue preclusion raises a different threshold from this alternative.

C:

Laches is an equitable defense concerning unreasonable delay and prejudice rather than a fixed statutory limitations date; that concept must be distinguished from Issue preclusion here.

Question 28

A defrauded distributor considers two procedural objections in different recovery proceedings. (1) After receiving a full disclosure, it delayed seeking equitable relief until records were destroyed and the respondent was prejudiced; which time-related equitable doctrine may be raised? (2) In a separate damages suit, an otherwise viable statutory cause of action was filed after the legislated filing period; which defense addresses that deadline? Choose TWO.

  1. Limitation period
  2. Forum non conveniens
  3. Laches
  4. Issue preclusion

Explanation

Correct Answers

A:

Statutes of limitation impose filing deadlines, with commencement and tolling issues governed by the applicable claim and jurisdiction; it specifically answers numbered situation 2.

C:

Laches is an equitable defense concerning unreasonable delay and prejudice rather than a fixed statutory limitations date; it specifically answers numbered situation 1.

Incorrect Answers

B:

Forum non conveniens concerns whether another available court is substantially more suitable for adjudication. It does not address prejudicial delay in equitable relief or the statutory filing deadline.

D:

Issue preclusion can prevent relitigation of an actually determined, essential issue where procedural prerequisites are met; the separate questions call for laches and limitation period, while no prompt asks for this additional rule.

Question 29

A defendant believes the judge has a financial interest in the case outcome. Which protection is implicated?

  1. Procedural due process
  2. Equal protection
  3. Legality and fair notice
  4. Judicial impartiality

Explanation

Correct Answer

D:

A fair tribunal must not be compromised by disqualifying interests or bias under applicable recusal rules. The decisive issue is judicial impartiality in this scenario.

Incorrect Answers

A:

Due process generally requires adequate notice and a meaningful opportunity to be heard when protected interests are at stake; those prerequisites should not be confused with Judicial impartiality.

B:

Equal-protection analysis considers whether government classifications or unequal treatment satisfy the governing constitutional standard; judicial impartiality addresses the distinct legal requirement stated in the facts.

C:

Criminal prohibitions must give constitutionally sufficient notice and cannot ordinarily be applied by arbitrary expansion after the event; judicial impartiality raises a different threshold from this alternative.

Question 30

A party receives no meaningful notice of a hearing that could deprive it of property. Which safeguard is implicated?

  1. Judicial impartiality
  2. Legality and fair notice
  3. Equal protection
  4. Procedural due process

Explanation

Correct Answer

D:

Due process generally requires adequate notice and a meaningful opportunity to be heard when protected interests are at stake.

Incorrect Answers

A:

A fair tribunal must not be compromised by disqualifying interests or bias under applicable recusal rules; the circumstances point to Procedural due process rather than that separate test.

B:

Criminal prohibitions must give constitutionally sufficient notice and cannot ordinarily be applied by arbitrary expansion after the event; procedural due process is the issue raised by the described conduct.

C:

Equal-protection analysis considers whether government classifications or unequal treatment satisfy the governing constitutional standard; the inquiry instead concerns Procedural due process, with its own elements.

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