CCA CCA Construction Fraud Detection and Prevention 2

Question 1

Which document matching procedure is the most fundamental anti-fraud control in construction accounts payable?

Accepted Answer

Three-way match of purchase order, receiving report, and vendor invoice before payment authorization

Answer

Three-way matching ensures that what was ordered, what was received, and what was billed are all consistent, preventing payment for items not ordered or not received.

Question 2

An auditor finds that a construction company's CFO established a vendor in the accounts payable system using a P.O. Box address matching the CFO's own residence zip code. This is most consistent with:

Accepted Answer

A fictitious vendor scheme where the CFO diverts payments to a personal account

Answer

Creating a fictitious vendor with an address linked to the perpetrator is the most common fictitious vendor fraud pattern, enabling the perpetrator to submit and approve payments to themselves.

Question 3

What is the ACFE fraud triangle, and how does it apply to construction project fraud risk assessment?

Accepted Answer

Pressure, opportunity, and rationalization — all three must be assessed when evaluating fraud risk on a construction project

Answer

The fraud triangle framework identifies pressure, opportunity, and rationalization as the three elements that converge to enable fraud, applicable to all construction project stakeholders.

Question 4

Which analytical procedure is most useful for identifying suspicious billing patterns across a large volume of construction invoices?

Accepted Answer

Benford's Law analysis of invoice amounts to identify digits that appear with abnormal frequency

Answer

Benford's Law predicts the frequency distribution of leading digits in naturally occurring numbers; significant deviations suggest that numbers may have been fabricated or manipulated.

Question 5

A construction project auditor discovers that the same subcontractor received payments for identical scope from both the owner and the general contractor. This is known as:

Accepted Answer

Double billing fraud, where the owner is billed for costs already paid by the contractor or vice versa

Answer

Double billing occurs when the same work is billed and paid by two separate parties, resulting in one party being overcharged.

(CCA) Certified Construction Auditor Practice Test

(CCA) Certified Construction Auditor Practice Test

CCA CCA Construction Fraud Detection and Prevention 2