A manufacturing firms controller created a fake subsidiary. He then ordered goods from the firms suppliers, told
Question:
A manufacturing firm’s controller created a fake subsidiary. He then ordered goods from the firm’s suppliers, told them to ship the goods to a warehouse he rented, and approved the vendor invoices for payment when they arrived. The controller later sold the diverted inventory items, and the proceeds were deposited to the controller’s personal bank account. Auditors suspected something was wrong when they could not find any entries regarding this fake subsidiary office in the property, plant, and equipment ledgers or a title or lease for the office in the realestate records.
REQUIRED For the situations presented, describe the recommendations the internal auditors should make to prevent similar problems in the future. (CMA, adapted)
Step by Step Answer:
Accounting Information Systems
ISBN: 9781292220086
14th Global Edition
Authors: Marshall B. Romney, Paul John Steinbart