CCA Fraud Detection and Prevention in Construction

Question 1

Which fraud scheme involves a construction contractor billing the owner for materials at inflated prices while receiving a secret kickback from the supplier?

Accepted Answer

Vendor kickback scheme

Answer

Ghost employee scheme

Answer

Bid rigging

Answer

Change order inflation

Question 2

In the context of the Fraud Triangle, which element describes a contractor's ability to commit fraud due to weak internal controls?

Accepted Answer

Opportunity

Answer

Pressure

Answer

Rationalization

Answer

Motivation

Question 3

A construction auditor reviewing payroll records discovers several employees with identical bank account numbers. This is a red flag for:

Accepted Answer

Ghost employee scheme

Answer

Bid rigging

Answer

Material substitution fraud

Answer

Front-loading

Question 4

Which procurement fraud scheme involves competitors secretly agreeing on which company will win a bid while others submit intentionally losing bids?

Accepted Answer

Bid rotation (bid rigging)

Answer

Phantom bidding

Answer

Sole-source manipulation

Answer

Change order fraud

Question 5

Which data analytics technique is most effective for identifying unusual patterns of round-dollar invoices in a construction project?

Accepted Answer

Benford's Law analysis

Answer

Regression analysis

Answer

Network diagram analysis

Answer

Monte Carlo simulation

Question 6

Material substitution fraud in construction occurs when:

Accepted Answer

A contractor uses lower-grade materials than specified and bills for the specified grade

Answer

A contractor orders too much material

Answer

The owner approves a substitution via change order

Answer

Materials are stored off-site