Which statement about vendor management practices is INCORRECT?

The statement regarding vendor master files remaining static once established is incorrect because vendor management practices require regular updates and reviews of the vendor master file. This is essential for ensuring that all vendor information is current and accurate, including contact details, contract terms, and compliance status. Regular reviews help to identify any changes in vendor status or risk levels, ensuring that the organization can manage its vendor relationships and mitigate potential fraud risks effectively.

In contrast, maintaining an up-to-date vendor master file allows for the identification of any discrepancies or changes in vendor behavior that could signal fraudulent activity. Vendor management is a dynamic process, and files must be maintained comprehensively to reflect any modifications in the vendor's operations, financial conditions, or compliance with contractual obligations. Additionally, static files may miss critical updates that could flag potential risks or issues that the organization needs to address.

Regular assessments and updates also facilitate compliance with applicable regulations and standards, ensuring that the organization is protecting itself against potential fraud schemes that may arise from outdated or erroneous vendor information.