Is Your VENDOR LIST Hiding Something?
If it is, the “something” could be internal fraud. Internal fraud is something businesses of all sizes need to guard against. If your vendor list is more than just a few entries and if others have access to it, you should be diligent about reviewing it on a regular (but random) basis.
Vendor fraud is relatively simple to perpetrate. All someone needs to do is create a “new” vendor or switch an inactive vendor to active and make a few strategic changes. Payments to the faux vendors can then be funneled to the fraudster’s or an accomplice’s bank account.
Here are some other potential red flags:
- Recent address changes
- Vendors with post office boxes instead of street addresses
- Two or more vendors at the same address
- Off-schedule payments
Attentiveness can help deter internal fraud. However, the best protection is to implement a system of strong internal controls.