ACFE Procurement Fraud and Vendor Schemes 3

Question 1

When investigating a suspected procurement fraud, which document should a fraud examiner prioritize obtaining first?

Accepted Answer

Contracts, purchase orders, and invoices related to suspect vendors

Answer

Contracts, purchase orders, and invoices form the paper trail at the core of procurement fraud and establish the basis for comparing authorized versus actual transactions.

Question 2

What is the primary purpose of a 'vendor audit right' clause in a procurement contract?

Accepted Answer

To give the buying organization the right to inspect the vendor's records for billing accuracy

Answer

A vendor audit right clause permits the purchasing organization to review the vendor's books and records to verify that charges billed match actual costs incurred.

Question 3

Which behavioral red flag is commonly associated with employees committing procurement fraud?

Accepted Answer

Living beyond apparent means or refusing to take vacation

Answer

Employees committing procurement fraud often display lifestyle indicators inconsistent with their salary, and may avoid vacations that would require others to handle their duties.

Question 4

In the context of ACFE's fraud tree, where do procurement and vendor fraud schemes primarily fall?

Accepted Answer

Both corruption and asset misappropriation depending on the scheme

Answer

Procurement fraud schemes span multiple branches: kickbacks and conflicts of interest fall under Corruption, while shell company invoicing and overbilling fall under Asset Misappropriation.

Question 5

Which internal control weakness most commonly enables procurement fraud to occur?

Accepted Answer

Lack of segregation of duties in the purchasing and payment cycle

Answer

Allowing one employee to both authorize purchases and approve payments removes the cross-check that would detect fictitious vendors or inflated invoices.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Procurement Fraud and Vendor Schemes 3