When checking the address of a new vendor, what is one potential red flag?

TheVendor Master Filetopic in the APS Certification Program highlights vendor validation to prevent fraud, including checking addresses for red flags. A significant red flag is when avendor’s address matches one of the organization’s own locations, as this may indicate insider fraud (e.g., an employee creating a fake vendor using a company address).

Option A (The vendor has the same address as one of the organization’s own locations): Correct. This is a red flag, as it suggests potential fraud, such as an employee setting up a fictitious vendor at a company site.

Option B (The vendor does not appear to use a post office box): Incorrect. Not using a P.O. box is not inherently suspicious; many legitimate vendors use physical addresses.

Option C (The vendor’s warehouse and its accounts receivable address are different): Incorrect. Different addresses for operational and financial functions are common and not a red flag.

Option D (The vendor is located in an unincorporated area): Incorrect. Location in an unincorporated area is not inherently suspicious and does not indicate fraud.

Reference to IOFM APS Documents: The APS e-textbook underVendor Master Filestates, “A red flag during vendor address checks is when the vendor’s address matches an organization’s own location, indicating potential insider fraud.” The training video notes, “Always verify vendor addresses against company locations to detect fraudulent setups.”