1. What factors in Johnson’s control environment have led to and facilitated the manager’s manipulation of inventory?
2. What pressures did Debbie have to overstate inventory?
3. What rationalization did Debbie use to justify her fraud?

Johnson Manufacturing, a diversified manufacturer, has seven divisions that operate in the United States, Mexico, and Canada. Johnson Manufacturing has historically allowed its divisions to operate independently.
Corporate intervention occurs only when planned results are not obtained. Corporate management has high integrity, although the board of directors is not very active. Johnson has a policy of performing employee screenings on all employees before hiring them. Johnson feels its employees are all well-educated and honest. The company has a code of conduct, but there is little monitoring of employees. Employee compensation is highly dependent on the performance of the company.