Which of the following statements BEST describes the objectives of a fraud risk management program?
A.
A fraud risk management program should solely focus on the formal procedures that management should take to address fraud before it occurs rather than after it occurs.
B.
A fraud risk management program should prioritize activities that detect fraud while it is occurring over activities that proactively identify and assess fraud risks.
C.
A fraud risk management program should include formal procedures for management to take in response to fraud, such as remediating control weaknesses.
D.
A fraud risk management program should incorporate policies and procedures designed to both prevent and detect fraud but should not address fraud responses.
A fraud risk management program should address the full fraud risk lifecycle: prevention, detection, investigation, response, corrective action, and continuous improvement. The CFE material explains that fraud risk management includes steps such as investigating allegations, punishing perpetrators, remediating control weaknesses, and rebuilding stakeholder confidence. Option C is correct because it recognizes that a fraud risk management program must include formal response procedures after fraud is identified. Option A is too narrow because it excludes post-fraud response. Option B is incorrect because proactive identification and assessment of fraud risks are essential. Option D is also incomplete because response procedures are necessary to correct weaknesses and prevent similar future misconduct. Therefore, option C best describes the program’s objectives.
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