Bribery and Corruption Flashcards

A purchasing manager accepts a vacation trip from a supplier before awarding them a contract. Under fraud classification, this is BEST described as:

Answer: Bribery

When a thing of value is given to influence a future business decision, it constitutes bribery; the vacation was received before the contract award as inducement.

What distinguishes an illegal gratuity from a bribe according to the ACFE's fraud classification?

Answer: An illegal gratuity is given after an official act as a reward rather than to influence a future act

An illegal gratuity is provided after an official act as a reward, whereas a bribe is given before or during the act to influence the outcome.

Which investigative technique is MOST effective for detecting corruption schemes where the perpetrator is a government official receiving cash bribes?

Answer: Net worth analysis comparing lifestyle to known income

Net worth analysis identifies unexplained wealth by comparing an official's known income to their actual assets and lifestyle, revealing unexplained cash receipts.

A company's agent in a foreign country secures government contracts by paying local officials. The company claims it did not know about the payments. Under the FCPA, the company:

Answer: May still be liable if it consciously disregarded red flags suggesting the payments were occurring

The FCPA recognizes 'conscious disregard' and 'willful blindness' as sufficient knowledge, so companies cannot avoid liability by deliberately ignoring red flags.

Which of the following is an example of a 'kickback' scheme in a procurement context?

Answer: A vendor pays a portion of contract proceeds back to the employee who approved the contract

A kickback occurs when a vendor returns a portion of contract proceeds to the employee who influenced the award, creating an improper benefit for the corrupt employee.

When conducting due diligence on a third-party agent in a high-risk country, which factor is MOST concerning from an anti-corruption standpoint?

Answer: The agent has personal relationships with government decision-makers and demands unusually high commissions

Government connections combined with unusually high commissions create a high risk that funds are being channeled as bribes to those officials.

Transparency International's Corruption Perceptions Index (CPI) is used in fraud examinations primarily to:

Answer: Assess the relative risk of corruption in countries where a company operates

The CPI ranks countries by perceived public sector corruption, helping fraud examiners prioritize due diligence and compliance resources in higher-risk jurisdictions.