What’s Your Fraud IQ?

Journal of Accountancy (Andi McNeal, CPA): Nearly all organizations rely on vendors to provide certain goods and services to facilitate their business operations. Whether for repairs or maintenance service, a purchase of office supplies, a consulting engagement, or a large capital contract, the need for vendors is universal—but it also carries an inherent risk of fraud. The same pressures, opportunities, and rationalizations that lead dishonest employees to steal from a company can be catalysts for vendors to engage in fraudulent behavior. Are you familiar with the ways that suppliers and contractors can defraud their customers? Do you know the warning signs of vendor fraud? Take this quiz and find out.

1. XYZ Corp.’s management suspects that a vendor, Green Inc., is intentionally billing the company for the same product order multiple times. Which of the following tests would be most helpful in uncovering such a scheme?

a. Comparing XYZ Corp.’s vendor master list to its employee master list for matching information.
b. Selecting a sample of invoices from Green Inc. and recalculating the totals for each line item.
c. Sorting invoices from Green Inc. by amounts, purchase dates, and delivery dates.
d. Reviewing all purchases from Green Inc. that fall just under internal authorization thresholds.
Continue taking the quiz at the Journal of Accountancy.

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