Which of the following best indicates a red flag of fictitious vendors in accounts payable fraud?

• A. Invoices from vendors with unverifiable addresses, mismatched banking details, and lack of supporting documentation.
• B. Vendors with verifiable addresses and consistent banking details.
• C. Regular delivery receipts matching purchase orders.
• D. Vendors with long-standing relationships and documented legitimacy.

Answer: (A)

When screening for fictitious vendors in accounts payable, the strongest signal is a combination of signs that the vendor may not exist or be legitimate. Invoices from vendors whose addresses can’t be verified, banking details don’t match the vendor’s claimed identity, and there is a lack of supporting documentation (such as contracts, purchase orders, or receipts) point directly to a fabrication meant to siphon funds. An unverifiable address makes it hard to confirm the vendor’s physical presence; mismatched banking details suggest the payment might be going to a different or unknown account; and no supporting paperwork means there’s no legitimate transaction trail to justify the invoice. Together, these elements create a compelling red flag for fictitious vendors.

The other scenarios are less alarming in themselves: a vendor with verifiable details and consistent banking information appears credible; regular delivery receipts that align with purchase orders indicate proper processing; and long-standing, documented legitimacy also supports credibility. While none are absolute guarantees of legitimacy, they don’t as clearly signal fraud as the combination of unverifiable addresses, mismatched banking details, and missing documentation.