Question

Indirect vs direct methods of employee embezzlement: Vendor Fraud

1) Two main varieties:
2) Usually results in:-________ for purchased goods-shipment of ________ goods-_________ of purchased goods

Answer 1

Vendor fraud is a type of employee embezzlement where an employee colludes with a vendor to defraud the company they work for. There are two main varieties of vendor fraud: indirect and direct methods. Vendor fraud usually results in losses for purchased goods, shipment of substandard goods, and duplication of purchased goods.

Step-by-step explanation:

Vendor fraud is a type of employee embezzlement where an employee colludes with a vendor to defraud the company they work for. There are two main varieties of vendor fraud: indirect and direct methods.

1. Indirect methods involve creating false documents or manipulating records to deceive the company about the purchase of goods or services. This could include fabricating invoices, creating fictitious vendors, or altering purchase orders.
2. Direct methods involve the employee colluding with the vendor to overcharge the company for goods or services. The employee may receive kickbacks or bribes from the vendor in exchange for inflating the prices.

Regardless of the method used, vendor fraud usually results in:

• Losses for purchased goods, as the company pays for goods that were never received or were overpriced.
• Shipment of substandard goods, as the vendor may deliver inferior products to avoid suspicion.
• Duplication of purchased goods, as the employee may order more goods than needed and sell the excess for personal gain.