CFA CFA Corruption & Bribery Schemes 2 — Questions and Answers
Question 1: Which investigative technique is MOST effective for identifying undisclosed vendor relationships that indicate a conflict of interest?
- Interviewing the suspected employee directly first
- Cross-referencing vendor registration records with employee personal information (addresses, SSNs, names) (Correct answer)
- Reviewing customer complaint files
- Analyzing the company's marketing budget
Correct answer: Cross-referencing vendor registration records with employee personal information (addresses, SSNs, names)
Matching vendor registration data (addresses, ownership, phone numbers) against employee records can reveal hidden connections between employees and vendors they approve.
Question 2: Under the FCPA's accounting provisions, companies must maintain books and records that:
- Are audited annually by a Big Four accounting firm
- Accurately and fairly reflect company transactions and are supported by adequate internal controls (Correct answer)
- Are retained for a minimum of 10 years
- Disclose all foreign payments regardless of amount
Correct answer: Accurately and fairly reflect company transactions and are supported by adequate internal controls
The FCPA's books-and-records provision requires that transactions be recorded accurately so that corrupt payments cannot be disguised as legitimate business expenses.
Question 3: A 'grease payment' or 'facilitation payment' under the FCPA refers to:
- Large bribes paid to senior government ministers
- Small payments to low-level government officials to expedite routine administrative actions (Correct answer)
- Payments made through intermediaries to maintain deniability
- Gifts given to government employees during holidays
Correct answer: Small payments to low-level government officials to expedite routine administrative actions
The FCPA includes a narrow exception for small facilitating payments made to expedite routine, non-discretionary government actions, though this exception does not exist under the UK Bribery Act.
Question 4: When a fraud examiner suspects corruption in a government contracting environment, which document review is MOST revealing?
- Employee performance evaluations
- Bid solicitation files, evaluation scorecards, and award documentation (Correct answer)
- Customer satisfaction surveys
- Annual financial statements
Correct answer: Bid solicitation files, evaluation scorecards, and award documentation
Bid solicitation files and evaluation documentation show whether the selection process was followed correctly and whether scoring was manipulated to favor a corrupt vendor.
Question 5: An intermediary or agent who pays a bribe on behalf of a company to a foreign official may trigger FCPA liability for the company if the company:
- Did not directly authorize the payment
- Knew or consciously disregarded that the agent was likely to make corrupt payments (Correct answer)
- Filed the agent's contract with the SEC
- Terminated the agent immediately upon discovery
Correct answer: Knew or consciously disregarded that the agent was likely to make corrupt payments
The FCPA's 'conscious disregard' or 'willful blindness' standard means that ignoring red flags of an agent's corrupt conduct can create liability for the principal company.
Question 6: Which element is NOT required to prove commercial bribery under most U.S. state statutes?
- An intent to influence a business decision
- A payment or offer of something of value
- Proof that the bribe actually succeeded in changing the outcome (Correct answer)
- The recipient being an employee or agent of another organization
Correct answer: Proof that the bribe actually succeeded in changing the outcome
Commercial bribery statutes generally require only that a corrupt payment was made with intent to influence, not that it actually succeeded in influencing the outcome.
CFA CFA Corruption & Bribery Schemes 2
Which investigative technique is MOST effective for identifying undisclosed vendor relationships that indicate a conflict of interest?