Vendor Master File
Definition
The master record of approved suppliers in the accounts-payable system, containing each vendor's name, address, tax identification, and payment bank account. Unauthorised changes to this file are a primary enabler of billing fraud.
- System
- Accounts-payable / ERP system
- Contains
- Vendor name, address, tax ID, payment bank account
- Fraud role
- Primary enabler of billing and diversion fraud when altered without authorisation
- Control point
- Segregation of duties between vendor setup and invoice approval
Common questions
How does an unauthorised change to the vendor master file translate into a fraud loss?+
A perpetrator who can add a fictitious vendor or change a legitimate vendor's bank account routes subsequent invoice payments to an account they control, converting an otherwise ordinary accounts-payable transaction into a diversion of company funds.
What audit trail evidence typically surfaces this kind of scheme?+
Investigators look for a bank account change immediately followed by an invoice payment and then a reversion of the account details, matching the timing of unrelated vendor edits against payment run dates, and comparing the vendor's bank details against employee-linked accounts.
Related terms
- Benford's Law
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- Duplicate-Payment Analysis
- A data analytics test that identifies invoice payments made more than once for the same obligation, by matching on vendor, invoice number,...
- Pass-Through Scheme
- A billing scheme in which a legitimate supplier is used as a conduit. The fraudster, who controls or colludes with the supplier,...
- Shell Company
- A legal entity with no genuine business operations, created to receive fraudulent payments. In vendor fraud, the fraudster controls the shell and...
- Three-Way Match
- An accounts-payable control that requires a supplier invoice to match an authorised purchase order and a goods receipt note before payment is...