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Purchasing Manager Defrauding Company

How can a purchasing manager use his/her position to defraud the company?
What can be done to prevent it?
Where could an auditor look to find evidence of losses on purchase commitments and unrecorded liabilities to vendors?

Solution Preview

How can a purchasing manager use his/her position to defraud the company? What can be done to prevent it?

Frauds are deceptions made for personal gain by consciously misusing the employing organization's resources or assets. For example, a purchasing manager can approve merchandise purchases on behalf of his/her employer and can split these purchases into smaller amounts so that he/she can do phony purchases without getting attention and cover the fraud or he can create a shell corporation and cause fraudulent payments to be made to this company. In order to prevent these types of events, the employer should have strict accounting controls and conduct frequent reviews of disbursements and other related documents. For example, ...

Solution Summary

This solution discusses purchase commitments and unrecorded liabilities.

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