One day Adam was back at the store after losing a bid to Big Builder when he noticed someone in the store purchasing the exact items and quantities that were in the specifica- tion for that bid. The combination of items was unusual and it would be an unlikely coin- cidence for someone else to want such a combination in that exact quantity. The customer paid the retail price for the merchandise and left.
Adam decided to contact Big Builder, but he knew he could not do so and make any accusations. Adam set up a meeting with the president of Big Builder and inquired as to how Adam might "increase his business and better meet the needs of Big Builder." Eventually, the recent bid entered the conversation. Adam showed his copy of the bid to the president. The president retrieved a copy of the purchase order and recognized that the amount on it was more than the bid Adam had submitted. The company that submitted the bid was K. A. Supplies, Inc. Adam had never heard of K. A. Supplies and noted the address of K. A. Sup- plies on the purchase order. The president of Big Builder promised to investigate the bidding process.
Adam drove to the address of K. A. Supplies and found a packaging and shipping store at that address. Furthermore, Adam went to the county courthouse and inquired about K. A. Supplies. The company was listed in the county records and one of the purchasing agents for Big Builder was listed as an officer.
Required:
- Given the information that Adam knows, what do you believe is occurring at Big Builder?
- What other information would you want to obtain and how might you retrieve that information?
- What controls might be instituted at Big Builder to prevent improprieties in the bidding and purchasing process?