Question

Nellie works for a large manufacturing company. She heads the information systems department and works closely with the accounting department. Nellie knows a lot about the company's database systems and accounting practices. Her responsibilities include working with the company's vendors to create data communication lines. The company works with many vendors, including a large number of new vendors that have been added due to the company's rapid growth. Recently, Nellie has become concerned about the effectiveness of the internal controls in ensuring the integrity of the purchasing function. She expressed her concerns to senior management and has been asked to recommend proactive steps the company can take to prevent fraud from collusion between employees and vendors. A periodic letter to vendors explaining an organization's policy of not allowing employees to accept gifts or gratuities is an effective tool for both preventing and uncovering collusive frauds.

a. Trueb. False

Answer 1

The answer is: True

Step-by-step explanation:

Lets suppose an "ethical and good" vendor is intimidated by a firm´s employee that requests or "firmly suggests" some type of compensation for doing business with them. The vendor might act improperly because they may feel afraid of losing an important client. If the company issues letters to its vendors discouraging these types of non-ethical or illegal practices, the vendor might step up and report the bad actions of the company´s employee.