CFE Question of the Day: Whistleblower Reporting Channels

Quiz Yazan Ibrahim
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CFE exam practice question — CFE Question of the Day: Whistleblower Reporting Channels

CFE exam practice question: daily practice for the Certified Fraud Examiner (CFE) exam — domain: Fraud Prevention and Deterrence.

Question

A mid-sized company has low levels of internal fraud reporting despite several anonymous comments on the employee forum. Which action would most effectively increase authentic, usable internal reports while supporting effective investigations?

  • A. Require employees to submit suspected fraud reports in writing to their immediate supervisor.
  • B. Offer small monetary rewards for any internal tips that lead to an investigation.
  • C. Establish an independently managed, confidential third-party hotline with multiple reporting options (phone, web, email).
  • D. Deliver mandatory annual ethics training that emphasizes the company’s reporting policy and consequences for retaliation.
Show the answer and explanation

Correct answer: C. Establish an independently managed, confidential third-party hotline with multiple reporting options (phone, web, email).

Establishing an independently managed, confidential third‑party hotline is the best option because it lowers fear of retaliation, increases trust in anonymity or confidentiality, and provides a neutral intake process that can triage and preserve evidence for investigations. Requiring reports to go to immediate supervisors often suppresses reporting when the supervisor is involved or when employees fear reprisal. Offering monetary rewards can generate false or low‑quality tips and may create perverse incentives that harm workplace morale. Mandatory ethics training supports awareness but, on its own, is unlikely to overcome fear or distrust; training should complement, not replace, independent reporting channels.

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