Proactive Fraud Detection Tests

Internal and external databases can be queried for red flags of 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.