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Question 1

Score: 0/0

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

Income statement

Balance sheet

Statement of cash flows

Statement of retained earnings

to track

2026 Statistics

Key Facts: CFE Exam

75%

Passing Score Required

~375/500 correct

500

Exam Questions

4 sections of 125

85,000+

CFEs Worldwide

ACFE 2025

$450

Exam Fee

Plus ACFE membership

25-30%

Salary Premium

For CFE-certified professionals

60 days

Testing Window

Complete all 4 sections

The CFE exam consists of 500 questions across four sections (125 each), administered at Prometric centers. Candidates have 60 days to complete all sections after exam approval. The exam is untimed but each section typically takes 2-3 hours. There are over 85,000 CFEs worldwide. CFEs earn 25-30% more than non-certified peers in fraud-related roles.

Sample CFE Practice Questions

Try these sample questions to test your CFE exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 200+ question experience with AI tutoring.

1Which financial statement provides a snapshot of a company's financial position at a specific point in time?

A.Income statement

B.Balance sheet

C.Statement of cash flows

D.Statement of retained earnings

Explanation: The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity. The income statement covers a period of time (revenues and expenses), while the statement of cash flows shows cash movements over time. Understanding financial statements is essential for fraud examiners to detect anomalies and misstatements.

2What does the accounting equation state?

A.Revenue - Expenses = Net Income

B.Assets = Liabilities + Equity

C.Debits = Credits

D.Beginning Balance + Additions - Deductions = Ending Balance

Explanation: The fundamental accounting equation is Assets = Liabilities + Equity. This equation must always remain in balance. Fraud examiners use this equation to understand how fraudulent transactions might affect the financial statements and to detect discrepancies in accounting records.

3What is skimming in the context of fraud schemes?

A.Stealing cash from the register after it has been recorded

B.Stealing cash before it is recorded in the accounting system

C.Creating fictitious vendors to generate payments

D.Altering checks after they have been signed

Explanation: Skimming is the theft of cash before it is recorded in the accounting system. This makes it difficult to detect because there is no direct audit trail. Examples include an employee taking customer payments before they are deposited or recording them. Skimming is one of the most common cash fraud schemes.

4Which of the following is a red flag that may indicate skimming is occurring?

A.Unusually high gross profit margins

B.Decreasing sales trends without corresponding market decline

C.Excessive number of voided transactions

D.All of the above

Explanation: All listed items are potential red flags for skimming. High profit margins may indicate sales are being recorded but cash stolen (inconsistent with skimming but worth investigating). Decreasing sales without market decline suggests revenue is being diverted. Excessive voids may be used to conceal stolen cash. Fraud examiners should investigate these anomalies.

5What distinguishes cash larceny from skimming?

A.Cash larceny involves larger amounts of money

B.Cash larceny occurs after the cash has been recorded in the accounting system

C.Cash larceny is always committed by management

D.Cash larceny involves checks rather than currency

Explanation: Cash larceny is the theft of cash that has already been recorded in the accounting system (on-book fraud), while skimming is theft before recording (off-book fraud). Because cash larceny involves recorded funds, it is often detected through reconciliation procedures and audit trails, making it easier to detect than skimming.

6Which control is most effective in preventing cash larceny?

A.Segregation of duties between cash handling and cash recording

B.Increasing employee salaries

C.Posting fraud hotline numbers

D.Performing annual financial statement audits

Explanation: Segregation of duties is one of the most effective internal controls for preventing cash larceny. When different employees handle cash and record cash transactions, collusion is required to commit fraud, significantly increasing the difficulty and risk of detection. This is a fundamental principle of internal control.

7In a shell company billing scheme, what is a "shell company"?

A.A company that sells seashells as a legitimate business

B.A fictitious entity created for the purpose of billing the victim company for goods or services not provided

C.A bankrupt company that no longer operates

D.A subsidiary company that operates independently

Explanation: A shell company in fraud terminology is a fictitious entity created for fraudulent purposes, typically to bill the victim company for goods or services never provided. The fraudster creates fake invoices from this non-existent company and processes payments to themselves or accomplices.

8What is a common red flag of a billing scheme involving a shell company?

A.Invoices with sequential numbers

B.Post office box addresses or addresses that match employee addresses

C.Invoices with detailed line items

D.Vendors who have been doing business for over 10 years

Explanation: Post office box addresses or vendor addresses that match employee addresses are significant red flags for shell company schemes. Fraudsters often use P.O. boxes to hide their identity and may use their home address or an address known to them. Other red flags include lack of telephone numbers, vague company names, and invoices with round dollar amounts.

9What is check tampering?

A.Using chemicals to remove ink from checks

B.Forging or altering checks to divert payments to the fraudster

C.Writing checks for amounts just under authorization thresholds

D.Stealing blank checks from the office supply cabinet

Explanation: Check tampering involves forging or altering checks to divert payments to the fraudster. This can include forging signatures, altering payee names, changing amounts, or creating unauthorized checks. It is one of the most common asset misappropriation schemes and requires access to checks and often to the check signing process.

10Which control is most effective in preventing check tampering?

A.Using a signature stamp for all checks

B.Requiring dual signatures on checks above a certain threshold

C.Pre-signing checks for emergencies

D.Allowing the bookkeeper to sign checks under $1,000

Explanation: Requiring dual signatures on larger checks is an effective control against check tampering because it requires collusion between two authorized signers to perpetrate fraud. Signature stamps and pre-signed checks eliminate the control that a signature provides. Allowing bookkeepers to sign checks concentrates authority in one person.

About the CFE Exam

The CFE credential is the premier certification for fraud prevention, detection, and investigation professionals. The exam covers four domains: Financial Transactions and Fraud Schemes, Law, Investigation, and Fraud Prevention and Deterrence. It's recognized globally and essential for auditors, investigators, compliance officers, and forensic accountants.

Questions

500 scored questions

Time Limit

Untimed (must complete within 60 days)

Passing Score

75%

Exam Fee

$450 (ACFE / Prometric)

CFE Exam Content Outline

125 Qs

Financial Transactions and Fraud Schemes

Asset misappropriation (billing, payroll, expense fraud), corruption (bribery, conflicts of interest), financial statement fraud, revenue recognition, inventory schemes, cash larceny, skimming, check tampering

125 Qs

Law

Evidence law, criminal and civil law, Sarbanes-Oxley Act, FCPA, money laundering laws, securities regulations, RICO, legal privileges, expert testimony, jurisdiction, extradition

125 Qs

Investigation

Fraud risk assessment, investigation planning, evidence gathering, digital forensics, data analysis, interview techniques, surveillance, tracing transactions, hidden assets, report writing

125 Qs

Fraud Prevention and Deterrence

COSO framework, internal controls, fraud risk management, ethics programs, whistleblower hotlines, corporate governance, fraud detection methods, deterrence strategies, compliance programs

How to Pass the CFE Exam

What You Need to Know

Passing score: 75%
Exam length: 500 questions
Time limit: Untimed (must complete within 60 days)
Exam fee: $450

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CFE Study Tips from Top Performers

1Master the Fraud Triangle (pressure, opportunity, rationalization) — it's the foundation of fraud examination

2Know the differences between skimming (off-books) and cash larceny (on-books) theft schemes

3Study the elements of key fraud statutes: wire fraud, mail fraud, securities fraud, and money laundering

4Understand SOX Section 404 (internal controls) and Section 806 (whistleblower protection)

5Learn the Federal Rules of Evidence — relevance, hearsay exceptions, and privileges

6Practice with the Fraud Examiners Manual — the primary reference for exam questions

7Focus on COSO framework components: control environment, risk assessment, control activities, information/communication, monitoring

Frequently Asked Questions

What is the CFE exam pass rate?

ACFE estimates the pass rate at approximately 50-60%. The 75% passing threshold requires answering approximately 375 questions correctly across all 500 questions. Success rates are higher for candidates who complete the CFE Exam Prep Course and have relevant professional experience in auditing, investigation, or fraud prevention.

How many questions are on the CFE exam?

The CFE exam contains 500 multiple-choice questions divided into four sections of 125 questions each: Financial Transactions and Fraud Schemes, Law, Investigation, and Fraud Prevention and Deterrence. The exam is untimed, allowing candidates to work at their own pace within the 60-day testing window.

How long do I have to complete the CFE exam?

Candidates have 60 days from exam approval to complete all four sections. Each section is taken separately at Prometric testing centers or via online proctoring. You must pass all four sections within the 60-day window. If you don't complete all sections in time, you'll need to reapply and pay the exam fee again.

How long should I study for the CFE exam?

Most successful candidates study 80-120 hours over 6-10 weeks. ACFE recommends approximately 2-3 months of preparation. Study time should be distributed across all four domains proportionally. Candidates with CPA, CIA, or law enforcement backgrounds may require less preparation time.

What is the hardest section of the CFE exam?

Many candidates find the Law section challenging due to the breadth of legal topics including evidence law, criminal statutes, and federal regulations (SOX, FCPA). The Investigation section can also be difficult due to scenario-based questions requiring practical judgment. Financial Transactions is typically considered the most straightforward for those with accounting backgrounds.

Is CFE certification worth it?

The CFE credential is widely recognized as the gold standard in fraud examination. CFEs typically earn 25-30% more than non-certified professionals in similar roles. The certification is valued across accounting firms, corporations, government agencies, and law enforcement. There are over 85,000 CFEs in 180 countries, making it a globally recognized credential.