Clear Voice Company, a communications equipment manufacturer, recently fell victim to a fraud scheme developed by one of its employees. To understand the scheme, it is necessary to review Clear Voice's procedures for the purchase of services.
The purchasing agent is responsible for ordering services (such as repairs to a photocopy machine or office cleaning) after receiving a service requisition from an authorized manager. However, since no tangible goods are delivered, a receiving report is not prepared.
When the Accounting Department receives an invoice billing Clear Voice for a service call, the accounts payable clerk calls the manager who requested the service in order to verify that it was performed.
The fraud scheme involves Dana Foley, the manager of plant and facilities. Dana arranged for her uncle's company, Foley Industrial Supply and Service, to be placed on Clear Voice's approved vendor list. Dana did not disclose the family relationship.
On several occasions, Dana would submit a requisition for services to be provided by Foley Industrial Supply and Service. However, the service requested was really not needed, and it was never performed. Foley would bill Clear Voice for the service and then split the cash payment with Dana.
Explain what changes should be made to Clear Voice's procedures for ordering and paying for services in order to prevent such occurrences in the future.