Many manufacturing costs involve a transaction between a business and another entity, such as a vendor or supplier. But even though these transactions may appear to be arm's-length, the business should be aware of the potential for fraud.
Please respond to this discussion question using the information from this lesson.
The accounting department of Marcom Company received an invoice from Engine-Aire Company for $12,000 for 500 engines for the lawnmowers that it manufactures. The invoice was printed on standard paper, with the Engine-Aire logo appearing prominently at the top of the document. The invoice was signed by John Master as the Engine-Aire shipping clerk. Although the accounting department reviewed the invoice, it received only a verbal approval from the receiving department, and no one in the receiving department actually saw the invoice. Several months later, Marcom's internal auditors discovered that the invoice was phony.
What could Marcom have done differently in order to identify the phony invoice before paying it?
This question was answered on: Sep 16, 2020
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