CFE Bribery and Corruption 2 — Questions and Answers
Question 1: Under the Foreign Corrupt Practices Act (FCPA), which of the following is considered a 'foreign official'?
- An employee of a state-owned enterprise (Correct answer)
- A private sector employee of a foreign company
- A foreign national working for a US company abroad
- A US citizen employed by a foreign private firm
Correct answer: An employee of a state-owned enterprise
The FCPA defines 'foreign official' to include employees of government-owned or government-controlled entities, such as state-owned enterprises.
Question 2: What is the primary distinction between a bribe and a facilitating payment under the FCPA?
- Facilitating payments are made to expedite routine non-discretionary government actions (Correct answer)
- Facilitating payments are always made in cash while bribes can be any value
- Facilitating payments are paid to private individuals while bribes go to officials
- Facilitating payments must be reported to the SEC while bribes do not
Correct answer: Facilitating payments are made to expedite routine non-discretionary government actions
Facilitating payments, also called grease payments, are made to expedite or secure the performance of routine, non-discretionary governmental actions and are a narrow exception under the FCPA.
Question 3: A fraud examiner discovers that a contractor paid a city inspector's personal credit card bill in exchange for approving a substandard building. This BEST illustrates which type of corruption scheme?
- Bribery (Correct answer)
- Extortion
- Kickback
- Embezzlement
Correct answer: Bribery
Bribery involves offering, giving, receiving, or soliciting something of value to influence an official act, which matches paying the inspector's bill for approval.
Question 4: Which of the following is a common red flag indicating a vendor may be paying bribes to obtain contracts?
- The vendor's prices are significantly below market rates
- The vendor frequently wins contracts in highly competitive markets
- The vendor requests payment through a third-party intermediary in a high-risk jurisdiction (Correct answer)
- The vendor has long-standing relationships with the purchasing company
Correct answer: The vendor requests payment through a third-party intermediary in a high-risk jurisdiction
Requests to route payments through third-party intermediaries, especially in high-risk jurisdictions, are classic red flags for bribery and corruption schemes.
Question 5: The UK Bribery Act 2010 differs from the FCPA primarily in that it:
- Criminalizes commercial bribery between private parties without any government nexus (Correct answer)
- Only applies to UK citizens regardless of where the bribe occurs
- Excludes facilitation payments from its scope entirely
- Requires proof of intent to defraud the government
Correct answer: Criminalizes commercial bribery between private parties without any government nexus
The UK Bribery Act covers both public and private sector bribery, making it broader than the FCPA which focuses primarily on bribing foreign government officials.
Question 6: In a bid-rigging scheme, which party is MOST likely to be the bribe payer?
- The winning bidder who coordinated with competitors (Correct answer)
- The government procurement officer who accepted payment
- The losing bidders who were compensated for submitting inflated bids
- The internal auditor who failed to detect the scheme
Correct answer: The winning bidder who coordinated with competitors
In bid rigging, the winning bidder typically pays bribes to the procurement official and may compensate losing bidders to submit sham bids, making them the primary bribe payer.
Question 7: Which of the following BEST describes the 'books and records' provision of the FCPA?
- It requires issuers to maintain accurate records that fairly reflect company transactions (Correct answer)
- It mandates that all foreign payments be recorded in a separate ledger
- It requires companies to report all government contacts to the SEC
- It prohibits companies from maintaining offshore accounts
Correct answer: It requires issuers to maintain accurate records that fairly reflect company transactions
The FCPA's books and records provision requires covered issuers to maintain books and records that accurately and fairly reflect transactions and dispositions of assets.
CFE Bribery and Corruption 2
Under the Foreign Corrupt Practices Act (FCPA), which of the following is considered a 'foreign official'?