CFE – Financial Transactions and Fraud Schemes — Question 57

Which of the following is the MOST APPROPRIATE technique for detecting a nonconforming goods or services scheme?

Answer options

• A. Determining if contract costs have exceeded or are expected to exceed the contract value
• B. Comparing the direct and indirect labor account totals from the prior year to the current year
• C. Examining change orders that increase the price of the existing contract
• D. Interviewing procurement personnel about the presence of any red flags

Correct answer: A

Explanation

The correct answer, A, is the most effective technique as it directly assesses whether costs are outpacing the contract value, indicating potential nonconformance. Options B and C provide historical or pricing information but do not directly indicate if goods or services are noncompliant. Option D relies on subjective insights from personnel, which may not be as reliable as a quantitative assessment.