ACFE Corruption and Bribery Schemes 1 — Questions and Answers
Question 1: Which of the following best describes a 'kickback' scheme in the context of occupational fraud?
- A vendor secretly pays an employee for directing business to that vendor (Correct answer)
- An employee steals cash directly from the company register
- A manager inflates their expense report for personal gain
- An executive misrepresents revenue on financial statements
Correct 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.
Question 2: Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign official is generally permitted?
- Facilitating payments to expedite routine governmental actions (Correct answer)
- Payments to win a new government contract
- Payments to retain an existing government contract through improper means
- Payments disguised as charitable donations to influence an official
Correct 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.
Question 3: A conflict of interest fraud scheme most commonly involves an employee who:
- Has an undisclosed personal stake in a transaction that affects their employer (Correct answer)
- Forges a supervisor's signature on a purchase order
- Skims cash receipts before they are recorded
- Creates fictitious vendors in the accounts payable system
Correct 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.
Question 4: Which red flag is most indicative of a bid-rigging scheme in procurement?
- A winning bidder repeatedly submits prices just below competitors' bids (Correct answer)
- An employee submits expense reports late
- A vendor provides volume discounts
- Contracts are approved by two separate managers
Correct 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.
Question 5: The ACFE's Fraud Tree classifies corruption schemes under which major branch?
- Fraudulent Disbursements
- Asset Misappropriation
- Corruption (Correct answer)
- Financial Statement Fraud
Correct answer: Corruption
The ACFE Fraud Tree organizes occupational fraud into three major branches: Asset Misappropriation, Corruption, and Financial Statement Fraud.
Question 6: Which of the following best describes 'economic extortion' as a form of corruption?
- An employee demands payment from a vendor in exchange for awarding them a contract (Correct answer)
- An employee inflates vendor invoices and pockets the difference
- A vendor bribes a purchasing agent to be placed on the approved vendor list
- An employee creates a shell company to receive fraudulent payments
Correct 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.
ACFE Corruption and Bribery Schemes 1
Which of the following best describes a 'kickback' scheme in the context of occupational fraud?