Corruption Flashcards
(33 cards)
What is corruption?
A term used to describe various types of wrongful acts designed to cause an unfair advantage.
_________ may be defined as the offering, giving, receiving, or soliciting of corrupt payments to influence an official act or business decision.
Bribery
Name the two types of Bribery schemes.
Official Bribery
Commercial Bribery
What type of bribery refers to the corruption of a public official to influence an official act of government?
Official Bribery
What is commercial bribery?
It is the corruption of a private individual to gain a commercial or business advantage.
What is a form of negotiated bribery in which a commission is paid to the bribe-taker in exchange for the services rendered?
Kickbacks
Why are kickbacks classified as a corruption scheme rather than an asset misappropriation scheme?
They involve collusion between employees and third parties.
Once a vendor knows it has an ________ purchasing agreement, it is motivated to raise prices to pay for the cost of the kickback.
Exclusive.
TRUE of FALSE:
In kickback schemes involving overbilling, a vendor submits inflated invoices to the victim organization, and the false invoices either overstate the cost of actual goods and services or reflect fictitious sales.
True.
TRUE of FALSE
The ability of the employee to authorize purchases, including the ability to authorize fraudulent purchases, is ALWAYS a key to kickback schemes.
FALSE.
What are items of value given to reward a decision, often after the recipient has made the decision?
Illegal Gratuities
Name three types of threats that can constitute extortion.
Physical Harm Property Damage Accusing a person of a crime Disgracing a person Public exposure
Other than Gifts, Travel and Entertainment, name two other methods of making corrupt payments.
Cash Payments Checks and Other Financial Instruments Hidden Interests Loans Credit Cards Transfers Not at Fair Market Value Promise of Favorable Treatment
TRUE or FALSE:
Two common red flags of corrupt employees are:
Tendency of employees to insert themselves into areas in which they are normally not involved and a history of not filing conflict of interest forms.
True.
TRUE or FALSE:
Some common red flags of a corrupt third party include a party who provides poor-quality products or services but is continually awarded contracts and receives or pays fees in cash.
True
What are the two methods used to conceal corrupt payments in a business?
On-book
Off-book
TRUE or FALSE:
On-book schemes are more difficult to trace than off-book schemes.
FALSE
The ________ _______ begins the examination process. It will contain all the important information about a subject organization, such as its money flow pattern and financial condition, and it will identify prospective witnesses and targets, as well as relevant documents and transactions.
Business Profile
To establish a business profile, fraud examiners should seek to answer specific questions. Name two of these questions.
How is the business organized, legally and structurally?
Who are the key personnel associated with the enterprise?
What is the money flow pattern involved in the suspect transaction?
Where are the company’s bank accounts?
What is the financial condition of the business?
What is the company’s recordkeeping system?
TRUE or FALSE:
When examining on-book payments, the most important information is the _______ _______ information when obtaining records from the entity suspected of making illegal payments.
Bank Account
Off-book payments are typically proven at the point of _______.
Receipt.
When trying to prove illegal payments from the point of receipt, the _______ ________ will identify most illicit funds deposited to accounts or expended in significant amounts.
Financial profile.
TRUE or FALSE:
When trying to prove corrupt payments from the point of receipt, the fraud examiner should never request an interview with the target.
False
A _______ ________ _______ occurs when an employee or agent - someone who is authorized to act on behalf of a principal - has an undisclosed personal or economic interest in a matter that could influence their professional role.
Conflict Of Interest
