One of the best ways to prevent and detect shell company schemes is to maintain and regularly update a list of:

Question $1$ options:

Known shell companies in order to compare names of vendors with it$.$

Approved vendors that should be verified by someone independent of the purchasing function.

Offshore banks whose routing numbers can be compared to vendor bank accounts $($using the endorsements on cashed checks$).$

Purchases by employees that have no purchasing authority $($because no one suspects them$).$