1. The kickback is a form of fraud often associated with purchasing. Most organizations expect their purchasing agents to select the vendor that provides the best products at the lowest price. To influence the purchasing agent in his or her decision, vendors may grant the agent financial favors (cash, presents, football tickets, and so on). This activity can result in orders being placed with vendors that supply inferior products or charge excessive prices. Required: Describe the controls that an organization can employ to deal with kickbacks. Classify each control as either preventive, detective, or corrective.
1. The kickback is a form of fraud often associated with purchasing. Most organizations expect their purchasing agents to select the vendor that provides the best products at the lowest price. To influence the purchasing agent in his or her decision, vendors may grant the agent financial favors (cash, presents, football tickets, and so on). This activity can result in orders being placed with vendors that supply inferior products or charge excessive prices.
Required: Describe the controls that an organization can employ to deal with kickbacks. Classify each control as either preventive, detective, or corrective.
2. A recent survey of institutional investors reveals that most of them want corporate boards to be composed of at least 75 percent independent directors.
Required: Write an essay explaining why director independence has become such a high-profile issue and one of great importance.
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