Borrowing money from a friend can strain even the strongest relationship. When the borrowed money will soon be plunked down on a blackjack table, the impact on the friendship can be devastating.

Woody Robinson and Al Hunt were sitting side by side at a blackjack table in Tunica, Mississippi. The two longtime friends and their wives were spending their summer vacation together as they had several times. After three days of loitering in the casinos that line the banks of the Mississippi River 20 miles south of Memphis, Woody found himself hitting up his friend for loans. By the end of the vacation, Woody owed Al nearly \($5,000\). The question facing Woody was how he would repay his friend.1 Two Pals Named Woody and Al Woodrow Wilson Robinson and Albert Leroy Hunt lived and worked in Huntington, West Virginia, a city of 60,000 tucked in the westernmost corner of the state. The bluecollar city sits on the south bank of the Ohio River. Ohio is less than one mile away across the river, while Kentucky can be reached by making a 10-minute drive westward on Interstate 64. Woody and Al were born six days apart in a small hospital in eastern Kentucky, were best friends throughout grade school and high school, and roomed together for four years at college. A few months after they graduated with business management degrees, each served as the other’s best man at their respective weddings.

Following graduation, Al went to work for Curcio’s Auto Supply on the western outskirts of Huntington, a business owned by his future father-in-law. Curcio’s sold lawnmowers, bicycles, and automotive parts and supplies, including tires and batteries, the business’s two largest revenue producers. Curcio’s also installed the automotive parts it sold, provided oil and lube service, and performed small engine repairs.

Within weeks of going to work for Curcio’s, Al helped Woody land a job with a large tire wholesaler that was Curcio’s largest supplier. Goodner Brothers, Inc., sold tires of all types and sizes from 14 locations scattered from southern New York to northwestern South Carolina and from central Ohio to the Delaware shore. Goodner concentrated its operations in midsized cities such as Huntington, West Virginia;

Lynchburg, Virginia; Harrisburg, Pennsylvania; and Youngstown, Ohio, home to the company’s headquarters.

Founded in 1979 by two brothers, T. J. and Ross Goodner, nearly three decades later Goodner Brothers’ annual sales approached \($40\) million. The Goodner family dominated the company’s operations. T. J. served as the company’s chairman of the board and chief executive officer (CEO), while Ross was the chief operating officer

(COO). Four second-generation Goodners also held key positions in the company.

Questions:-

1. List what you believe should have been the three to five key internal control objectives of Goodner’s Huntington sales office.
2. List the key internal control weaknesses that were evident in the Huntington unit’s operations.
3. Develop one or more control policies or procedures to alleviate the control weaknesses you identified in responding to Question 2.
4. Besides Woody Robinson, what other parties were at least partially responsible for the inventory losses Goodner suffered? Defend your answer.