Internal and external databases can be queried for red flags of corruption, collusive bidding, bid rigging and fraud by using the following steps.
- Identify high risk areas for potential misconduct, including areas where such offenses have been detected before or where controls are weak;
- Identify the potential schemes that are most likely to occur in the high risk areas by reviewing prior complaints, audits and investigative reports;
- Identify the red flags of the potential schemes that can be detected electronically, e.g., unusual bid patterns;
- Create and search electronic databases for the targeted red flags;
- Match the initial red flags that are detected to their potential scheme(s) and look for other indicators of the scheme(s);
- Conduct due diligence background checks on the suspect firms and individuals to identify common ownership or affiliation of companies, unexplained wealth of individuals or other pertinent background information;
- Identify the parties (firms and individuals) involved in the indicated transactions and schemes;
- Conduct further traditional detection and investigation steps (document reviews, etc.) for each suspected scheme.
See examples of automated tests to detect collusive bidding and the data required to conduct them.