ACFE Procurement Fraud and Vendor Schemes

Question 1

Which type of procurement fraud occurs when an employee creates a fictitious vendor and submits invoices for goods or services never provided?

Accepted Answer

Shell company fraud

Answer

Shell company fraud involves setting up a fictitious vendor entity to submit fraudulent invoices, diverting payments to the fraudster.

Question 2

In a kickback scheme involving procurement, which party typically initiates the fraudulent arrangement?

Accepted Answer

A company employee with purchasing authority

Answer

Kickback schemes typically involve an employee with purchasing authority who awards contracts to vendors in exchange for secret payments.

Question 3

What is 'bid splitting' in the context of procurement fraud?

Accepted Answer

Dividing a large purchase into smaller ones to avoid competitive bidding thresholds

Answer

Bid splitting involves breaking a large purchase into smaller transactions to circumvent policies requiring competitive bidding above certain dollar thresholds.

Question 4

Which red flag most strongly suggests a conflict of interest in a vendor relationship?

Accepted Answer

A vendor's address matching an employee's home address

Answer

A vendor address matching an employee's home address is a strong red flag indicating the employee may have an undisclosed financial interest in the vendor.

Question 5

What is a 'pay-and-return' scheme in accounts payable fraud?

Accepted Answer

Paying a vendor twice and keeping the duplicate payment refund

Answer

In a pay-and-return scheme, an employee processes a duplicate payment to a vendor, and when the vendor refunds it, the employee intercepts and keeps the refund check.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Procurement Fraud and Vendor Schemes