Question: A purchasing agent for a large hardware retailer has sole discretion in selecting vendors for the parts and supplies sold by the company. The agent

A purchasing agent for a large hardware retailer has sole discretion in selecting vendors for the parts and supplies sold by the company. The agent directs a disproportionate number of purchase orders to a supply company owned by the agent’s brother in law, which charges above-market prices for its products. The agent’s relationship with the supplier is unknown to his employer.
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What type of fraud is this, and what controls can be implemented to prevent or detect the fraud?

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