CCA Fraud Detection and Prevention in Construction 2

Question 1

Which anti-fraud control is most effective at deterring collusion between a contractor's project manager and a subcontractor?

Accepted Answer

Mandatory job rotation and vendor audit rights

Answer

Job rotation disrupts established collusive relationships, and contract audit rights allow the owner to examine subcontractor records independently.

Question 2

A construction auditor suspects change order inflation. Which procedure provides the strongest evidence?

Accepted Answer

Comparing change order costs to independent cost estimates and actual subcontractor quotes

Answer

Comparing claimed change order costs to independent estimates and the underlying subcontractor bids directly reveals whether amounts are inflated.

Question 3

Which condition most increases the risk of fraud in a construction project?

Accepted Answer

A single individual controlling both purchasing and payment approval

Answer

Concentration of purchasing and payment authority in one person eliminates the checks and balances that prevent unauthorized or fraudulent transactions.

Question 4

False claims in construction, where a contractor submits inflated invoices to a government owner, may subject the contractor to liability under which US federal law?

Accepted Answer

False Claims Act (31 U.S.C. § 3729)

Answer

The False Claims Act imposes civil and criminal penalties on those who knowingly submit fraudulent claims for payment to the federal government.

Question 5

A construction auditor finds that a sole-source contract was awarded without documented justification. The primary risk this represents is:

Accepted Answer

Loss of competitive pricing and potential favoritism or fraud

Answer

Undocumented sole-source awards bypass competitive safeguards and can mask favoritism, kickbacks, or inflated pricing.

(CCA) Certified Construction Auditor Practice Test

(CCA) Certified Construction Auditor Practice Test

CCA Fraud Detection and Prevention in Construction 2