What manipulation can employees with access to the Vendor Master File (VMF) engage in?

Employees with access to the Vendor Master File (VMF) have the potential to manipulate the data by entering bogus vendors and generating phony invoices. This option highlights a key risk associated with financial fraud where individuals can exploit their access to financial systems. By creating fake vendors within the VMF, they can issue invoices for services or goods that were never rendered. This not only leads to unauthorized payments but also makes it difficult for companies to track real expenses and effectively manage their finances.

The creation of fake vendors and the subsequent generation of fraudulent invoices can facilitate a variety of financial crimes, such as embezzlement, where the employee siphons off money under the guise of legitimate business transactions. This manipulation constitutes a significant threat in organizations, particularly if internal controls are weak or nonexistent.

In contrast, creating real businesses that provide services, auditing transactions for discrepancies, and administering legitimate vendor relationships all represent standard, ethical practices within a financial environment, which would not involve the manipulation of the Vendor Master File for illicit purposes.