September 1, 2022

QUESTION 1 : When an employee or official uses force or fear to demand money in exchange for making a particular business decision, that individual is engaging in: Bribery A kickback scheme An illegal gratuity scheme Economic extortion Extortion is defined as the obtaining of property from another, with the other party’s consent induced by wrongful use of actual or threatened force or fear. Economic extortion is present when an employee or official, through the wrongful use of actual or threatened force or fear, demands money or some other consideration to make a particular business decision. Thus, an example of an economic extortion scheme is if an employee or government official demands money in exchange for making a business decision. Similarly, if a politician threatens to shut down a business if it does not pay a bribe, this is also an example of an economic extortion scheme.   QUESTION 2 : Which of the following is TRUE regarding the methods typically used for making corrupt payments in bribery and corruption schemes? Payers often make corrupt payments by offering recipients loans on extremely favorable terms Payers often make corrupt payments by selling property to recipients at prices lower than the property’s market value Payers often make corrupt payments by paying off the recipient’s credit card debt All of the above Corrupt payments often take the form of loans. Three types of loans often turn up in fraud cases: An outright payment that is falsely described as an innocent loan A legitimate loan in which a third party—the corrupt payer—makes or guarantees payments to satisfy the loan A legitimate loan made on favorable terms (e.g., an interest-free loan) A corrupt payment can be in the form of credit card use or payments toward a party’s credit card debt. The payer might use a credit card to pay a recipient’s transportation, vacation, or entertainment expenses, or the payer might pay off a recipient’s credit card debt. In some instances, the recipient might carry and use the corrupt payer’s credit Corrupt payments also might come in the form of promises of favorable treatment. In addition, corrupt payments might occur in the form of transfers for a value other than fair market. In such transfers, the corrupt payer might sell or lease property to the recipient at a price that is less than its market value, or the payer might agree to buy or rent property from the recipient at an inflated price. The recipient might also “sell” an asset to the payer but retain the title   QUESTION 3 : Which of the following is TRUE regarding the methods typically used for making corrupt payments in bribery and corruption schemes? Payers often make corrupt payments by offering recipients loans on extremely favorable terms Payers often make corrupt payments by selling property to recipients at prices lower than the property’s market value Payers often make corrupt payments by paying off the recipient’s credit card debt All of the above Corrupt payments often take the form of loans. Three types of loans often turn up in fraud cases: An outright payment that is falsely described as an innocent loan A legitimate loan in which a third party—the corrupt payer—makes or guarantees payments to satisfy the loan A legitimate loan made on favorable terms (e.g., an interest-free loan) A corrupt payment can be in the form of credit card use or payments toward a party’s credit card debt. The payer might use a credit card to pay a recipient’s transportation, vacation, or entertainment expenses, or the payer might pay off a recipient’s credit card debt. In some instances, the recipient might carry and use the corrupt payer’s credit Corrupt payments also might come in the form of promises of favorable treatment. In addition, corrupt payments might occur in the form of transfers for a value other than fair market. In such transfers, the corrupt payer might sell or lease property to the recipient at a price that is less than its market value, or the payer might agree to buy or rent property from the recipient at an inflated price.   QUESTION 4 : Which of the following scenarios is an example of a kickback scheme? A politician threatens to shut down a business if it does not pay a bribe A government official demands money in exchange for making a business decision A vendor inflates the amount of an invoice submitted to the company for payment An employee receives a payment for directing excess business to a vendor Kickbacks are improper, undisclosed payments made to obtain favorable treatment. Thus, an employee who receives a payment for directing excess business to a vendor is an example of a kickback scheme. In such cases, there might not be any overbilling involved; the vendor simply pays the kickbacks to ensure a steady stream of Extortion is defined as the obtaining of property from another, with the other party’s consent induced by wrongful use of actual or threatened force or fear. Economic extortion is present when an employee or official, through the wrongful use of actual or threatened force or fear, demands money or some other consideration to make a particular business decision. Thus, an example of an economic extortion scheme is if a government official demands money in exchange for making a business decision.   QUESTION 5 : Which of the following is NOT a type of loan that frequently turns up in corruption cases? A legitimate loan made at market rates A legitimate loan in which a third party makes the loan payments A legitimate loan made on favorable terms An outright payment falsely described as an innocent loan Corrupt payments often take the form of loans. Three types of loans often turn up in fraud cases: An outright payment that is falsely described as an innocent loan A legitimate loan in which a third party—the corrupt payer—makes or guarantees payments to satisfy the loan A legitimate loan made on favorable terms (e.g., an interest-free loan) A

QUESTION 1 : Which of the following is a red flag of a procurement fraud scheme in which vendors are colluding to circumvent the competitive bidding process? Qualified contractors do not submit bids The winning bidder subcontracts work to losing bidders Some bids do not meet the requirements of the solicitation documents All of the above Common red flags of procurement fraud schemes involving collusion among contractors include: The industry has limited competition. The same contractors bid on each project or product. The winning bid appears too high. All contractors submit consistently high bids. Qualified contractors do not submit bids. The winning bidder subcontracts work to one or more losing bidders or to non-bidders. Bids appear to be complementary bids by companies unqualified to perform the work. Some bids fail to conform to the essential requirements of the solicitation documents (i.e., some bids do not comply with bid specifications). Some losing bids were poorly prepared. Fewer competitors than usual submit bids on a project or product. When a new contractor enters the competition, the bid prices begin to fall. There is a rotational pattern to winning bidders (e.g., geographical, customer, job, or type of work). There is evidence of collusion in the bids (e.g., bidders make the same mathematical or spelling errors; bids are prepared using the same typeface, handwriting, stationery, or envelope; or competitors submit identical bids). There is a pattern where the last party to bid wins the contract. There are patterns of conduct by bidders or their employees that suggest the possibility of collusion (e.g., competitors regularly socialize, hold meetings, visit each other’s offices, or subcontract with each other).   QUESTION 2 : High percentages of returns, missing compliance certificates, and evidence of falsified test inspection results are red flags of which of the following procurement fraud scenarios? A contractor delivering goods or services that do not conform to the contract specifications Two or more competing contractors agreeing to refrain from bidding A procuring employee manipulating the bidding process to benefit a favored contractor A contractor charging the procuring entity for labor costs that are not allowable Nonconforming goods or services fraud, also known as product substitution or failure to meet contract specifications, refers to attempts by contractors to deliver goods or services to the procuring entity that do not conform to the underlying contract specifications. Once contractors deliver goods that do not conform to the contract, they bill and receive payment for conforming goods or services without informing the purchaser of the deficiency. The following is a list of potential red flags for nonconforming schemes: High percentage of returns for noncompliance with specifications Missing, altered, or modified product compliance certificate Compliance certificates signed by employees with no quality assurance responsibilities Materials testing done by supplier, using the supplier’s own personnel and facilities Evidence that test or inspection results were falsified (e.g., documents appear altered or modified, test documents are illegible, signatures on documents are illegible, documents were signed by unqualified or inappropriate personnel, or test reports are similar or identical to sample descriptions and test results) Highest profit product lines have the highest number of material return authorizations or reshipments Discrepancy between product’s description or normal appearance and actual appearance (e.g., a new product appears to be used) Used, surplus, or reworked parts are delivered Delivery of products that appear counterfeit (e.g., product packaging, appearance, and description do not appear genuine; items that are consistently defaced in the same area; items that appear different from each other) Offers by contractors to select the sample and prepare it for testing Delivery of look-alike goods Unusually high number of early replacements Contractor restricts or avoids inspections of goods or services upon delivery   QUESTION 3 : A contractor who delivers materials of lesser quality than specified in the contract or uses a lower quality staff than specified in the contract might be involved in which of the following types of procurement fraud schemes? Nonconforming goods or services fraud Labor mischarging fraud Material mischarging fraud Product division fraud Nonconforming goods or services fraud , also known as product substitution or failure to meet contract specifications , refers to attempts by contractors to deliver goods or services to the procuring entity that do not conform to the underlying contract specifications. Once contractors deliver goods that do not conform to the contract, they bill and receive payment for conforming goods or services without informing the purchaser of the deficiency. These schemes can involve a wide variety of conduct, but, generally, they include any deliberate departures from contract requirements to increase profits or comply with contract time schedules.   QUESTION 4 : Which of the following is NOT a common red flag of a bid tailoring scheme? Competitive awards vary among several suppliers. Only a few bidders respond to bid requests. There are unusually broad specifications for the type of goods or services being procured. A contract is not rebid even though fewer than the minimum number of bids are received. Bid tailoring schemes (also known as specifications schemes) occur during the presolicitation phase. In these schemes, an employee with procurement responsibilities, often in collusion with a contractor, drafts bid specifications in a way that gives an unfair advantage to a certain contractor. Some common red flags of bid tailoring include: Weak controls over the bidding process Only one or a few bidders respond to bid requests Contract is not rebid even though fewer than the minimum number of bids are received Similarity between specifications and the winning contractor’s product or services Bid specifications and statements of work are tailored to fit the products or capabilities of a single contractor Unusual or unreasonably narrow or broad specifications for the type of goods or services being procured Requests for bid submissions do not provide clear bid submission information (e.g., no clear time, place, or manner of submitting bids) Unexplained changes in contract specifications from previous proposals or similar items High number of competitive awards to one supplier Socialization or personal contacts among