Corruption and Bribery Schemes Flashcards

Which of the following best describes a 'kickback' scheme in the context of occupational fraud?

Answer: A vendor secretly pays an employee for directing business to that vendor

A kickback is a secret payment made by a vendor to an employee in exchange for steering business or favorable contract terms to that vendor.

Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign official is generally permitted?

Answer: Facilitating payments to expedite routine governmental actions

The FCPA contains a narrow exception for facilitating payments made to expedite or secure the performance of routine, non-discretionary governmental actions.

A conflict of interest fraud scheme most commonly involves an employee who:

Answer: Has an undisclosed personal stake in a transaction that affects their employer

A conflict of interest occurs when an employee has an undisclosed personal or financial interest in a transaction that could benefit them at the employer's expense.

Which red flag is most indicative of a bid-rigging scheme in procurement?

Answer: A winning bidder repeatedly submits prices just below competitors' bids

Consistently winning bids by a very slim margin above competitors suggests the winning vendor may have advance knowledge of competitor pricing.

The ACFE's Fraud Tree classifies corruption schemes under which major branch?

Answer: Corruption

The ACFE Fraud Tree organizes occupational fraud into three major branches: Asset Misappropriation, Corruption, and Financial Statement Fraud.

Which of the following best describes 'economic extortion' as a form of corruption?

Answer: An employee demands payment from a vendor in exchange for awarding them a contract

Economic extortion occurs when an employee demands something of value from a third party as a condition for taking or refraining from taking an official action.