14. A potential problem for a manufacturer is that purchasing agents may take kickbacks or receive gifts from vendors in exchange for favorable contracts. Which of the following is the least effective in preventing this problem?
A. A specific organizational policy prohibiting the acceptance of anything of value from a vendor.
B. An organizational code of ethics that prohibits such activity.
C. A requirement for the purchasing agent to develop a profile of all vendors before the vendors is added to the authorized vendor list.
D. The establishment of long-term contracts with major vendor, with the contract terms approved by senior management.
Answer (C) is correct.
REQUIRED: The least effective control to prevent purchasing agents from taking kickbacks or gifts from vendors.
DISCUSSION: A requirement for the purchasing agent to develop a profile of all vendors is the least effective approach because it concerns only the authorization of vendors, a function that should be performed independently of the purchasing agent. It does not address the purchasing agent's relationships with approved vendors.
Answer (A) is incorrect. A policy prohibiting kickbacks and gifts from vendors provides guidance and influences behavior.
Answer (B) is incorrect. A code of ethics gives direction to the purchasing agents and is helpful in influencing behavior.
Answer (D) is incorrect. Approval of long-term vendor contracts by senior management is an effective procedure that is increasingly being used by many organizations.