Procurement Fraud and Vendor Schemes Flashcards
7 cards from real ACFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Procurement Fraud and Vendor Schemes flashcards as text
Which form of bid rigging involves competitors agreeing in advance on who will win a particular contract?
Answer: Bid rotation
Bid rotation is a collusion scheme where competitors take turns winning contracts, ensuring each participant gets a share of the business over time.
What is 'complementary bidding' in a bid rigging conspiracy?
Answer: Submitting intentionally losing bids to make a predetermined winner appear competitive
Complementary bidding involves conspirators submitting deliberately high or otherwise unacceptable bids so that the designated winner appears to win a legitimate competition.
Under the Sherman Antitrust Act, bid rigging is classified as which type of violation?
Answer: A per se illegal violation
Bid rigging is treated as a per se illegal violation under the Sherman Antitrust Act, meaning it is automatically illegal regardless of any claimed justification.
Which purchasing scheme involves an employee authorizing payment for goods received at inflated prices due to a secret arrangement with the vendor?
Answer: Overbilling scheme
An overbilling scheme involves a vendor charging more than the agreed or market price, with an employee facilitating this in exchange for a kickback from the excess amount.
Which control is most effective at preventing employees from creating fictitious vendors?
Answer: Requiring dual authorization for vendor master file changes
Requiring dual authorization (two separate employees) to add or modify vendor master file records prevents any single employee from creating a fictitious vendor unilaterally.
What is a 'subcontractor kickback' scheme in construction procurement fraud?
Answer: A general contractor receiving secret payments from subcontractors in exchange for favorable subcontract awards
In a subcontractor kickback scheme, a general contractor's employee steers subcontracts to certain firms in exchange for secret payments, inflating overall project costs.
Which data analysis method is best suited to identifying employees who are also listed as vendors in the accounts payable system?
Answer: Cross-matching employee and vendor master files
Cross-matching employee data (names, addresses, SSNs, bank accounts) against the vendor master file directly identifies conflicts of interest or fictitious vendor relationships.