Case 1:

A secretary for a public company interceded on behalf of an unpaid legitimate supplier and the accounts payable department could not locate the original invoice, it nonetheless agreed to pay the vendor based on a fax copy. The secretary seized this opportunity and together with two non-employee accomplices set up three phony companies, and submitted fax copies of doctored original invoices for consulting fees. The fraud was discovered when a manager questioned a huge variation in the budget but not until four years and US$1.7 million later (Wells, 2004).

1.Describe and classify the kind of fraud that occurred.

2.How could this type of fraud be prevented?