Which of the following is most likely to be considered a control weakness?

This scenario represents a significant control weakness due to a lack of segregation of duties. Buyers are responsible for negotiating with and selecting vendors. Granting them the ability to also update the official vendor master file creates an opportunity for fraud. For instance, a buyer could create a fictitious vendor and direct payments to an account they control. The function of maintaining the vendor master file should be segregated from the purchasing function and handled by an independent department, such as accounts payable or a master data management team, following a formal vetting and approval process for all new vendors.

A. This describes a three-way match (purchase order, receiving report, invoice), which is a fundamental control strength to validate payments.
B. Using prenumbered purchase orders is a standard control to ensure the completeness and integrity of purchasing records.
D. This illustrates a proper authorization control, where a request is initiated by one party and approved by a higher-level manager.

1. Romney, M. B., & Steinbart, P. J. (2021). Accounting Information Systems (15th ed.). Pearson. In Chapter 13, Table 13-1 ("Threats and Controls in the Expenditure Cycle"), the threat of "Purchasing from unauthorized suppliers" is listed. The corresponding preventative control is "Maintaining a list of approved suppliers and configuring the system to permit purchases only from approved suppliers... Restriction of access to the supplier master file." This implies that those who purchase (buyers) should not have access to modify the file (p. 400).

2. The Institute of Internal Auditors (IIA). (2017). Practice Guide: Auditing the Procurement Function. Section 3.2, "Key Procurement Controls," emphasizes the importance of segregation of duties, stating that "key duties that should be segregated include... vendor selection and approval from vendor master file maintenance." This separation is critical to prevent fraud and unauthorized purchases.

3. Singleton, T. W. (2010). Understanding and Preventing Purchasing Fraud. Journal of Corporate Accounting & Finance, 21(4), 33–38. This article explains that a common purchasing fraud scheme involves employees adding fictitious vendors to the master file. It notes, "A major control weakness is allowing the same person who can create a purchase order to also add a new vendor to the vendor master file" (p. 35). https://doi.org/10.1002/jcaf.20589