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  • Writer's pictureJerry Ipsen, CFE, MBA

Red Flags that Signal Construction Fraud Could be Happening to You

The following red flags are indicators that fraudulent activity may possibly exist within your company. While they are not absolute indicators of fraud occurring, they do warrant further investigation on your part.

- Application for payment that is unusual in its presentation or form.

- Related parties and/or common ownership

- Unusual bid patterns.

- Unsuccessful bidders hired as subcontractors.

- Missing or disorganized billing documentation.

- Unauthorized changes in or missing time records.

- Use of contingency funds without proper or timely explanation of usage.

- Changes in the SOV without proper or timely explanation of changes.

- Subcontractor complaints regarding delays in payment.

- Missing subcontractor lien waivers.

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