1. You work for a small manufacturing firm, where it is clearlytoo expensive to have proper segregation of duties. Because of thislack of control, manage- ment knows that opportunities exist toperpetrate fraud within the company. Management is particu- larlyconcerned with possible collusion between pur- chasing agents andvendors because of the relatively small size of the company and thefact that a single purchasing agent is often solely responsible fora vendor’s account. Management knows now that a lot of money can besaved by proactively preventing fraud and not just acting on areactionary or crisis basis. They have started to establish anopen-door policy where all employees are encouraged to talk aboutpressures and opportunities faced while on the job. Management alsowants to establish a hot- line where employees can reportsuspicious activity.

a.          Is anemployee hotline necessary?

b.         Is this sortof whistle-blowing ethical?

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c.          Whatcan management do as they establish this hotline to encourageemployees to actu- ally use it?