6. Elm Software Co. has three contracts with a large multinational company. Each contract involves developing a software program for a particular department based on a single proprietary software framework that Elm must create. Elm’s ordinary charge for developing this type of software framework is$100,000. Knowing that each of the three contracts is being managed separately by the respective departments, Elm charges the full $100,000 to each department for the framework, in addition to the department-specific charges for the resulting software programs, resulting in an extra $200,000 of income for the projects. Which of the following best describes this type of fraud scheme?a. Need recognition.b. Commingling of contracts.c. Change-order abuse.d. Multiple reimbursements.7. While reviewing vendor contracts for his employing company, Gregory finds a contract with an originalprice that appears unusually low for the type and amount of work to be performed. He also notes that the project’s requirements documentation lacks the detail he would have expected for the type of project under contract. Looking through the rest of the project documentation, he finds numerous change orders that the contractor submitted to “clarify project requirements,” the result of which is a 200% increase in the project cost. Based on Gregory’s findings, which of the following schemes is most likely occurring?8. Acme Co.’s hotline received a call claiming that Acme’s purchasing manager has been ordering excessive amounts of certain inventory items to receive kickbacks from a vendor. Which of the following tests would be LEAST helpful in verifying the legitimacy of the tip received?
1. (c) A common, unsophisticated form of vendor fraud involves submitting invoices to a customer more than once for payment. Often, the vendor simply issues an invoice with a new invoice number but leavesmany other identifiers—such as delivery date and specific line items—the same. The duplicate invoice might be submitted days, weeks, or months after the original to deflect suspicion. A simple sorting of invoices by the invoice amounts is an effective first step in identifying possible duplicates. However, to help conceal the scheme, some vendors will change more than the invoice number when they submit duplicates. They might remove or alter line items, tax or freight amounts, or discounts, which would affect the invoice total. Consequently, these invoices would not show up on a duplicates test by invoice
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- Fall '14