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| A process by which several bidders conspire to split contracts, thereby ensuring that each gets a certain amount of work |
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| A process by which an employee assists a vendor to fraudulently win a contract through the competitive bidding process |
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| A fraudulent scheme in which a large project is split into several component projects so that each sectional contract falls below the mandatory bidding level, thereby avoiding the competitive bidding process |
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| The offering, giving, receiving, or soliciting of something of value for the purpose of influencing an official act |
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| A scheme that typically involves a favor done for a friendly client |
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| A secret agreement between two or more people for a fraudulent, illegal, or deceitful purpose, such as overcoming the internal controls of their employer |
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| The offering, giving, receiving, or soliciting of something of value for the purpose of influencing a business decision without the knowledge or consent of the principal |
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| Situation where an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company as a result |
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| The obtaining of property from another with the other party's "consent" having been induced by wrongful use of actual or threatened force or fear |
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| The offering, giving, receiving, or soliciting of something of value for, or because of, an official act |
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| Schemes in which a vendor pays back a portion of the purchase price to an employee of the buyer in order to influence the buyer's decision |
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| A pre-solicitation-phase bid-rigging conspiracy between the buyer and contractor where an employee of the buyer receives something of value to convince his company that they have a "need" for a particular product or service |
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| The decisions or actions of government agents or employees |
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| Conflict of interest scheme in which a victim company unwittingly buys something at a high price from a company in which one of its employees has a hidden interest |
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| Conflict of interest scheme in which a victim company unwittingly sells something at a low price to a company in which one of its employees has a hidden interest |
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| A non-company account into which company money has been fraudulently diverted and from which bribes can be paid |
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| A pre-solicitation-phase bid-rigging conspiracy between the buyer and vendor where an employee of the buyer receives something of value to set the specifications of the contract to accommodate that vendor's capabilities |
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| A purchasing scheme where an employee knows his company plans to purchase a certain asset, takes advantage of the situation by purchasing the asset himself, and then sells the asset to his employer at an inflated price |
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| A sales scheme that occurs when an employee under-bills a vendor in which she has a hidden interest |
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| b) False. Corruption schemes were far less common than asset misappropriations (p 237) |
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Definition
| According to the ACFE's 2006 survey, corruption schemes were more common than asset misappropriations a) True b) False |
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| a) True. The median loss of corruption cases was more than three and a half times as large as the median loss of asset misappropriations (p. 237) |
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Definition
According to the ACFE's 2006 survey, corruption cases had a higher median loss than asset misappropriations
a) True
b) False |
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| b) Falsification of financial records |
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Definition
Which of the following is not a corruption scheme?
a) Bribery
b) Falsification of financial records
c) Conflicts of interest
d) Economic extortion
e) Illegal gratuities |
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| c) Conflicts of interest (p. 238) |
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Definition
Among the four types of corruption schemes, which was committed most frequently?
a) Bribery
b) Gratuities
c) Conflicts of interest
d) Extortion |
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Definition
Bill knows that a certain product in his store will not sell. He gives $10 to five people to lie about his product and tell other customers what a great deal it is. As a result, customers buy his product. This is an example of:
a) Bribery
b) Illegal gratuity
c) Economic extortion
d) None of the above |
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Term
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Definition
Georgina awards a multi-million-dollar construction contract to Company A. Georgina accepts a BMW as a reward. This is an example of:
a) Bribery
b) an illegal gratuity
c) Economic extortion
d) a conflict of interest |
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| a) Economic extortion (p. 239) |
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Definition
Kalani demands a certain supplier to pay her $1,000; in return she will award the supplier with subcontracts on various projects. If the supplier refuses, she will award the subcontracts to rival suppliers. This is an example of:
a) Economic extortion
b) Bribery
c) Illegal gratuity
d) Conflict of interest |
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Definition
Kickbacks and bid-rigging schemes are both ____ schemes.
a) Conflict of interest
b) Illegal gratuity
c) Economic extortion
d) Bribery |
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| Kickback schemes are different from billing schemes in that kickback schemes involve ____. |
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Company A submits an inflated invoice to Company B. Kelly, an employee at Company B, make sure that the vendor is paid for the false invoice and receives a payment from the vendor. This s an example of:
a) a Conflict of interest
b) an Economic extortion
c) a Kickback scheme
d) an Illegal gratuity |
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Definition
What scheme is commonly known as a "pay up or else" corruption scheme?
a) Economic extortion
b) Bribery
c) Conflict of interest
d) Illegal gratuity |
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Definition
Company A submits an inflated invoice to Company B. Jonny, which works for Company B, authorized payment for the invoice. Jonny committed an overbilling scheme, which is a:
a) kickback scheme
b) Illegal gratuity
c) conflict of interest
d) economic extortion |
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Definition
In the case study, "Why is This Furniture Falling Apart?" Art Metal U.S.A. paid quality insurance inspectors to convince General Services Administration that the equipment met government specifications. This was a form of:
a) economic extortion
b) bribery
c) conflict of interest
d) illegal gratuity |
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Definition
| A non-company account from which bribes can be made. |
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Definition
| Which of the following is a way to prevent kickback schemes? a) separation of purchasing, authorization, receiving and storing goods b) maintenance of an updated vendor list c) proper review and matching of all support in disbursement vouchers d) all of the above |
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Definition
Many kickback schemes begin as legitimate, nonfraudulent transactions between a company and one of its vendors
a) True
b) False |
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Definition
Independent verification of new vendors or independent approval of purchases will help detect or deter many kickback schemes
a) True
b) False |
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Definition
Routinely monitoring the prices paid for goods and services and comparing them to market rates will help detect a kickback scheme
a) True
b) False |
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Definition
What is (are) the type(s) of bribery schemes in the pre-solicitation phase of the competitive bidding process?
a) Bid pooling
b) Need recognition scheme
c) specifications scheme
d) b) only
e) b) and c) only
f) all of the above |
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Term
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Definition
| Which of the following is indicative of a need recognition scheme? a) Unusually high requirements for stock and inventory levels b) A large number of surplus items have been written off to scrap c) An employee says the "need" can only be met by a certain supplier or contractor d) all of the above |
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Term
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Definition
Specifications are prepared to assist vendors in the bidding process, telling them what they are required to do and providing a firm basis for making and accepting bids
a) True
b) False |
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Term
| c) a specifications scheme (p 248) |
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Definition
George works for a public utility company. Company A pays him to write a contract that will eliminate all competition for the project. This is an example of:
a) bid pooling
b) a need recognition scheme
c) a specifications scheme
d) none of the above |
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Term
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Definition
One type of specifications scheme involves the writing of vague specifications that will require amendments at a later date. This allow the supplier to raise the price of the contract when the amendments are made
a) True
b) False |
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Definition
Tom is a manager for Company A. He split a large repair job into several component contracts, in which the cost was below the mandatory bidding level. The manager then hired his brother Joe to handle each of the component projects. This is an example of:
a) bid splitting
b) a need recognition scheme
c) a kickback scheme
d) an illegal gratuity |
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Term
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Definition
In the ____ phase of the competitive bidding process, fraudsters attempt to influence the selection of a contractor by restricting the pool of competitors from whom bids are sought
a) Pre-solicitation
b) Solicitation
c) Submission |
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Term
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Definition
Which of the following is not a way to eliminate competition in the bidding process?
a)
b) An employee writes contract specifications that apply to only one vendor
c) A vendor pays an employee to assure that one or more of the vendor's competitors do not get to bid on the contract
c) bid pooling
d) Solicit bids from fictitious suppliers
e) a) and c) only
f) all of the above |
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Term
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Definition
Supplies Inc. gives gifts and cash payments to B Corp. In return, Supplies Inc. is allowed to submit its bids last after seeing the bids of its competitors. This situation may occur in the ____ phase
a) Submission
b) Solicitation
c) Pre-solicitation
d) none of the above |
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Term
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Definition
Which of the following is indicative of a bid-rigging scheme?
a) An unusually high contract price
b) Low-bid awards are followed by amendments that increase payments to the contractor
c) Large, unexplained price differences among bidders
d) a) and c) only
e) a), b) and c) |
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Term
| d) Reed decided not to prosecute King, but she was required to pay full restitution (p 255). King did not have to pay back anything |
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Definition
Which of the following is not true in relation to the case study "Working Double Duty?"
a) King's name on the Spicewood Travel business card lead to the discovery of her fraud
b) King was basically running her own travel business from her office at ElectroCity
c) King was involved in a kickback scheme
d) Reed decided not to prosecute King, but she was required to pay full restitution
e) King felt that she was unappreciated and not properly compensated
f) King committed an overbilling scheme |
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| e) b) and d) only (p 258) |
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Definition
Which of the following is a sales scheme?
a) turnaround sales
b) underbilling
c) overbilling
d) writing off sales
e) b) and d) only
f) c) only |
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Term
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Definition
Billy started his own business, Computers Made Your Way, which directly competed with his employer, Computer Heaven. Billy convinced employees from Computer Heaven to work for his own business, therefore violating his duty of loyalty to his employer. This is an example of a:
a) Conflict of interest
b) Business diversion
c) Resource diversion
d) both b) and c) |
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Term
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Definition
Turnaround sales are a form of:
a) purchasing scheme
b) sales scheme
c) business diversion
d) kickback |
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