Final answer:
The fraudulent activity conducted by Curtis, involving the submission of fake maintenance invoices, should have ideally been prevented by effective internal controls, including segregation of duties and regular audits. These measures reduce the risk of fraud by dividing responsibilities among various individuals and verifying financial transactions and records.
Step-by-step explanation:
The actions of Curtis, the maintenance supervisor who submitted fraudulent maintenance invoices, should have been prevented by implementing internal controls within the company. Internal controls are various procedures and mechanisms put in place to prevent fraud, ensure accuracy in financial reporting, and encourage adherence to company policies. Specifically, segregation of duties is one critical control that could have prevented this fraudulent activity. This means that no single individual has control over all aspects of any financial transaction. The responsibility for authorizing transactions, recording them, and handling the related asset should be divided among different individuals.
Furthermore, regular audits, both internal and external, serve as a deterrent to fraud and are a means of detecting fraud if it occurs. An audit involves an examination of various financial records to ensure their accuracy and to detect any irregularities. The presence of an audit trail which includes invoices, purchase orders, and checks, can also provide evidence of any anomalies in financial transactions.
In addition to these, background checks on employees, proper vendor verification processes and continuous employee education on fraud prevention are also effective in mitigating the risk of such fraudulent activities. Implementing robust internal controls is essential for preventing fraud like that committed by Curtis, thereby safeguarding the company's assets and financial integrity.