During a brainstorming session, employees stated that dishonest vendors could submit fictitious invoices to the...

The primary fraud scenario is payment of fictitious invoices for goods or services that were never actually received. Therefore, the most relevant control is confirmation that the organization received the goods or services before an invoice is authorized for payment. A properly functioning three-way or equivalent verification process links the invoice to evidence of an approved purchase and actual receipt. Automatic payment processing occurs after approval and would not prevent approval of a fictitious invoice. Segregation of duties is important in accounts payable but does not directly address employees approving nonexistent deliveries without checking supporting evidence. Preferential vendor treatment relates more closely to conflicts of interest, bribery, or procurement manipulation. Consequently, testing evidence of receipt most directly addresses the fraud risk identified during brainstorming.