Donna Boyd is an internal auditor for GDP, Inc., an electronics manufacturer. While conducting a routine review of the company's inventory costing, she discovers that the cost of one of the parts they use in manufacturing DVD players has been steadily increasing over the last six months and is now much higher than the general market price. Additionally, she notices that the company has been heavily favoring one specific supplier for that part. Based on these circumstances, what type of fraud scheme may be occurring at GDP?
A) Kickbacks
B) Conflict of interest
C) Shell company
D) Any of the above

Question

Quizplus · Accepted Answer

The circumstances described could potentially indicate any of the listed fraud schemes. The favoring of a specific supplier despite higher costs could suggest kickbacks, a conflict of interest (if someone in the company benefits personally from using that supplier), or the creation of a shell company to funnel money.

Donna Boyd Is an Internal Auditor for GDP, Inc