When Auditing the Award of a Major Contract, Which of the Following

Multiple Choice

When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme? 1. Subsequent change orders increase requirements for low-bid items. 2. Material contract requirements are different on the actual contract than on the request for bids. 3. A high percentage of employees are charged to indirect accounts. 4. Losing bidders are hired as subcontractors.

A) 1 only
B) 2 only
C) 1 and 3.
D) 2 and 4.