A manager who is authorized to make purchases up to a certain dollar amount approves the set-up of a fictitious vendor and subsequently initiates purchase orders.
Which of the following controls would best address this risk?
A.
Establish separate vendor creation and approval teams.
B.
Develop and distribute a code of conduct that prohibits conflicts of interest.
C.
Perform a regular review of the vendor master file.
D.
Require submission of a conflict-of-interest declaration.
A. Establish separate vendor creation and approval teams would best address this risk. By separating the responsibilities of vendor creation and approval, the organization can implement a segregation of duties, which reduces the likelihood of fraudulent activities, such as the creation of fictitious vendors.
The Q is asking about segregation of duties, rather than conflicts of interests. B and D asking about conflict of interest which is not relevant in this Q. as the main point of the Q is that the manager approves the fictious vender deliberately and then release a payment for it. so, the closest answer would be D as general control coz the other options somehow not logical. Anyone to clarify?
yeah, this is a tricky question but I think code of ethics reduces the level of organizational risk? But A can be correct too. idk.
upvoted 2 times
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