Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A medium-sized, family-owned business operates as both a distributor and a retailer. This business distributes widgets to independent retailers, as well as operating its own

A medium-sized, family-owned business operates as both a distributor

and a retailer. This business distributes widgets to independent retailers, as well as operating its own retail outlets. Last year, the business suffered a loss of an estimated $1 million dollars in inventory. Several factors played into the inventory theft, including poor internal controls, a lack of timely accounting records, and difficulty in measuring and tracking inventory items.

The theft was perpetrated by several long-time employees over the course of several months. A portion of the inventory was delivered to one of the company's customers and a portion of the inventory was redirected and sold for cash which was split among the accomplices. One of the employees involved was responsible for recording inventory shipments. Misappropriated deliveries were shown as delivered to the company-owned retail outlets. As a matter of company procedure, the company only invoices its regular customers. Company-owned retail outlets are not invoiced upon delivery of inventory. Inventory was not reconciled or monitored for the company-owned retail outlets which enabled the misappropriated inventory to be removed from inventory records without detection.

Identify and describe the following:

-a measure that could have prevented the theft

-a measure that could have detected the theft

-a step to take once fraud is suspected.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Decision Making And Control

Authors: Jerold Zimmerman

7th Edition

0078136725, 9780078136726

More Books

Students also viewed these Accounting questions