You are considering purchasing a small-sized cafeteria founded 15 years ago by the vendor. The business has been very successful during this time. Financial records show earnings steadily increasing by 8% per annum, even during the Covid-19 Pandemic. Your review of the business identifies the following behaviours suggesting that fraud could be occurring: (i). Employees regularly override internal controls and are not monitored by management. (ii). Two employees have free access to inventory kept in the cold store. (iii). There are friendly relationships between the manager, who also purchases inventory for the business, and three major suppliers. (iv). The manager has been observed taking cash regularly from the cash register.

REQUIRED:

(a) Discuss the fraud symptoms reflected by these behaviours.

(b) Discuss any fraud preventative measures that may be implemented to address these behaviours.