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2. FRAUD SCHEME - PURCHASING AGENT A purchasing agent for a large hardware retailer has sole discretion in selecting vendors for the parts and supplies sold by the company. The agent directs a disproportionate number of purchase orders to a supply company owned by the agent’s brother- in-law, which charges above-market prices for its products. The agent’s relationship with the supplier is unknown to his employer. Required What type of fraud is this, and what controls can be implemented to prevent or detect the fraud?

2. FRAUD SCHEME - PURCHASING AGENT A purchasing agent for a large hardware retailer has sole discretion in selecting vendors for the parts and supplies sold by the company. The agent directs a disproportionate number of purchase orders to a supply company owned by the agent’s brother- in-law, which charges above-market prices for its products. The agent’s relationship with the supplier is unknown to his employer. Required What type of fraud is this, and what controls can be implemented to prevent or detect the fraud?

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle
Section: Chapter Questions
Problem 22RQSC
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2. FRAUD SCHEME - PURCHASING AGENT A purchasing agent for a large hardware retailer has sole discretion in selecting vendors for the parts and supplies sold by the company. The agent directs a disproportionate number of purchase orders to a supply company owned by the agent’s brother- in-law, which charges above-market prices for its products. The agent’s relationship with the supplier is unknown to his employer.

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What type of fraud is this, and what controls can be implemented to prevent or detect the fraud?

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