[Ethical Responsibilities of the Fraud Examiner] Jane, a Certified Fraud Examiner (CFE), was hired lo conduct a fraud examination at XYZ Company Her…

The ACFE Code of Professional Ethics and the standards governing fraud examinations prohibit a Certified Fraud Examiner (CFE) from providing absolute assurance or rendering an opinion that an entity is "free of fraud." A fraud examination is limited by its scope and the inherent possibility of concealed or collusive fraudulent activities. The absence of evidence of fraud is not conclusive proof of its absence. A CFE's duty is to report the findings of the examination based on the evidence obtained. Stating that a company is free of fraud would be an unsubstantiated opinion, violating the ethical requirement to have a reasonable basis for any opinion rendered and the professional duty of objectivity. The proper course of action is to report that the examination, within its defined scope, did not uncover evidence of fraud.

The option "False" is incorrect because it would imply that a CFE is permitted to make such a definitive and unsubstantiated statement. This contradicts the fundamental principles of fraud examination, which acknowledge that no examination can guarantee the complete absence of fraud. Doing so would mislead stakeholders and violate the CFE's ethical obligations.

1. Association of Certified Fraud Examiners (ACFE). (2023). Fraud Examiners Manual

International Edition.

Section 1.203

"Fraud Examination vs. Auditing": This section clarifies that a fraud examination is not designed to provide an opinion on financial statements or internal controls as a whole. Its purpose is to resolve specific allegations. Providing a blanket statement that a company is "free of fraud" is akin to an assurance opinion

which is outside the scope and methodology of a fraud examination.

Section 4.102

"Reporting Standards": This section emphasizes that fraud examination reports must be based on the evidence gathered. A CFE's conclusions must be supported by sufficient

relevant evidence. A declaration that no fraud exists in the entire company cannot be supported by evidence from a scoped examination.

2. Association of Certified Fraud Examiners (ACFE). Code of Professional Ethics.

Article V: "A CFE

in conducting examinations

will obtain evidence or other documentation to establish a reasonable basis for any opinion rendered. No opinion shall be expressed regarding the guilt or innocence of any person or party." Stating a company is "free of fraud" is a broad opinion for which a "reasonable basis" cannot be established through a standard fraud examination.

Article I: "A CFE shall demonstrate a commitment to professionalism and diligence in the performance of his or her duties." Issuing a statement that cannot be factually supported is neither professional nor diligent.

3. Singleton

T. W.

& Singleton

A. J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). John Wiley & Sons.

Chapter 2

"The Fraud Examiner's and Forensic Accountant's Roles": This university-level textbook explains that forensic accountants and fraud examiners must maintain objectivity and avoid making conclusive statements about the existence or non-existence of fraud. Their role is to present factual findings. The text notes

"The fraud auditor should never give an opinion about guilt or innocence... The fraud auditor's report should be a factual report." (p. 41). Declaring a company "fraud-free" is an opinion

not a factual report of findings.