Acct 421 Quiz 4

Question 1

Corruption

Answer 1

Corruption is where someone using the role of an employee colludes with a third party where the employee receives a benefit.

Question 2

Bribery

Answer 2

Bribery- most common form of corruption Employee or government official is given something to influence a decision, an act, or gain an advantage (money, gifts, trips, promises of future employment or contracts

Question 3

Money Laundering

Answer 3

Money laundering is a scheme to conceal the identity of a illegally obtained proceeds to make them look like they came from legitimate sources

Question 4

Which organizations have as their purpose the detection and countering of money laundering?

Answer 4

Financial Action Task Force

Egmont Group of Financial Intelligence Units

The Financial Crimes Enforcement Network

Question 5

The stages in the money laundering process?

Answer 5

• The placement stage – get the illegal funds into financial institutions, domestic and foreign without attracting attention from authorities
• The layer stage – Most complex stage and acts to make it hard to trace the origins of the money. Use a number of layered transactions between the money origins until bringing it in country. Move money to countries with banking secrecy laws allowing the hiding of owners’ identities
• The integration stage – The funds enter back into the legitimate economy so it looks like funds from legitimate activities

Question 6

What are money transfer systems outside the traditional financial system?

Answer 6

• Informal remittance systems outside the financial system
• Tend to be culturally –based systems in various parts of the world
• Other informal remittance systems: mobile payments, pre-paid credit cards, online auctions and casinos

Question 7

POS?

Answer 7

an integrated cash register system

Typically links to the rest of the organization producing a wealth of data and information and helps efficiently manage business affairs

Question 8

Zapper Fraud?

Answer 8

Electronic suppression of sales or transactions that uses software which deletes sales or transaction records

Requires high-level access to the POS (owner)

Question 9

In which industries is zapper fraud most likely to occur?

Answer 9

Hospitality industry where inventory records are not as accurate

Grocery where spoilage can be high

Zapper fraud less likely to occur in retail with accurate inventory records

Authorities (especially taxing agencies) investigate for zapper fraud

Question 10

Extortion

Answer 10

Extortion – when an employee blackmails a vendor demanding kickbacks or gratuities in exchange for giving the vendor business

Question 11

Illegal Gratuities

Answer 11

Illegal gratuities –Gratuities are when a vendor gifts to an employee to influence a purchase or decision

Question 12

Conflict of Interest

Answer 12

Conflicts of interest – A conflict of interest exists when an employee has an undeclared interest in a transaction with another

Question 13

Impacts of Corruption

Answer 13

The bribe taker’s organization loses opportunities

The organization’s legitimate competitors lost opportunities

If the bribe is offered to a public sector organization, citizens as a whole lose