Question
As the engagement Senior, you are responsible for completing the audit of the revenue cycle for Best City, a specialty retailer of consumer electronics, home
As the engagement Senior, you are responsible for completing the audit of the revenue cycle for Best City, a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services.
Best City (BC) is headquartered in Richmond, VA with over 450 retail outlets across the Eastern and Midwestern United States. The Company operates retail stores and successful websites under the brand names Best City and BC (www.BestCity.com and www.BC.com). Total sales for the fiscal year ending 12/31/16 were $5.4 billion; $4.3 billion were generated by its retail stores, while $1.1 billion were generated by its e-commerce websites.
Unfortunately, as part of year-end cut-off testing, you notice a few potential red flags for fraud within some of the website sales transactions that you believe should be reported to the audit manager and partner.
REQUIRED: Please briefly discuss any red flags for fraud within the following documents (including the type of fraud scheme suggested by each red flag).
NOTE: Assume no sales tax is charged for online sales.
| Best City, Inc. 8945 Main Street | Uniform Bill of Lading (Domestic) | Shipper No. 315AD | Date: 12/29/2016 | Document No. 264889 |
| Richmond, VA | FOB Destination |
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| 23126 | TO: Peter Venable | Vehicle #7 | Carrier Name (2 day deliv.) | Old Dominion |
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| 264 Mason Street; Columbia, SC 29201 |
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| Quantity Shipped 2 | Phillips 25 inch LCD Monitor | Weight 6.2 lbs | Rate $1.53 per lb | Charge $9.49 |
| 1 | HP EliteBook 1040 Laptop | 15.6 lbs | $1.53 per lb | $23.87 |
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| Total $33.36 | |
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| Best City, Inc. 8945 Main Street | Uniform Bill of Lading (Domestic) | Shipper No. 389RB | Date: 12/29/2016 | Document No. 264891 |
| Richmond, VA | FOB Destination |
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| 23126 | TO: Chris Perry | Vehicle #8 | Carrier Name (2 day deliv.) | Old Dominion |
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| 174 Salem Way; Fairfax, VA 22031 |
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| Quantity Shipped 1 | HP OfficeJet Pro 8720 Printer | Weight 5.3 lbs | Rate $1.52 per lb | Charge $8.06 |
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| Total $8.06 | |
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| Best City, Inc. 8945 Main Street | Uniform Bill of Lading (Domestic) | Shipper No. 392RB | Date: 12/30/2016 | Document No. 264893 |
| Richmond, VA | FOB Shipping Point |
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| 23126 | TO: Sylvia Creel | Vehicle #9 | Carrier Name (2 day deliv.) | Old Dominion |
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| 7387 Tristram Drive; Pfafftown, NC 27040 |
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| Quantity Shipped 2 | Dell Inspiron 17.3 inch Laptop | Weight 9 lbs | Rate $1.51 per lb | Charge $13.59 |
| 1 | 55 inch LG TV | 34 lbs | $1.51 per lb | $51.34 |
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| Total $64.93 |
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| Best City, Inc. 8945 Main Street | Uniform Bill of Lading (Domestic) | Shipper No. 318AD | Date: 1/5/2017 | Document No. 264921 |
| Richmond, VA | FOB Destination |
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| 23126 | TO: Scott Ziegler | Vehicle #6 | Carrier Name (2 day deliv.) | Old Dominion |
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| 381 Amazon Way; Athens, GA 41040 |
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| Quantity Shipped 1 | MacBook Pro 15.4 inch | Weight 13 lbs | Rate $1.55 per lb | Charge $20.15 |
| 1 | 65 inch Sony TV | 43 lbs | $1.55 per lb | $66.65 |
| 1 | Garmin DriveSmart 61 LMT | 1.4 lbs | $1.55 per lb | $2.17 |
| 1 | HP OfficeJet Pro 8710 | 5.2 lbs | $1.55 per lb | $8.06 |
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| Total $97.03 |
| Best City, Inc. 8945 Main Street | Charge Sales Invoice (Domestic) | Credit Terms n/30 | Date: 12/31/2016 | Document No. 318519 |
| Richmond, VA |
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| 23126 | Customer ID: VENAB0012 |
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| Bill of Lading |
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| Name: Peter Venable |
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| No. 264889 |
| Quantity Shipped
2 | Phillips 25 inch LCD Monitor | Unit Price 371.00 | Discounts
0.00 | Extension
$742.00 |
| 1 | HP EliteBook 1040 Laptop | 1,239.00 | 0.00 | $1,239.00 |
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| Total $1,981.00 |
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| Best City, Inc. 8945 Main Street | Charge Sales Invoice (Domestic) | Credit Terms n/30 | Date: 12/31/2016 | Document No. 318522 |
| Richmond, VA |
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| 23126 | Customer ID: PERRY1433 |
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| Bill of Lading |
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| Name: Chris Perry |
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| No. 264891 |
| Quantity Shipped
1 | HP OfficeJet Pro 8720 Printer | Unit Price 285.00 | Discounts
0.00 | Extension $285.00 |
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| Total $285.00 |
| Best City, Inc. 8945 Main Street | Charge Sales Invoice (Domestic) | Credit Terms n/60 | Date: 12/31/2016 | Document No. 318548 |
| Richmond, VA |
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| 23126 | Customer ID: CREEL7291 |
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| Bill of Lading |
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| Name: Sylvia Creel |
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| No. 264893 |
| Quantity Shipped
2 | Dell Inspiron 17.3 inch Laptop | Unit Price 1,324.00 | Unit Discount 264.80 | Extension $2,118.40 |
| 1 | 55 inch LG TV | 862.00 | 172.40 | $689.60 |
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| Total $2,808.00 |
| Best City, Inc. 8945 Main Street | Charge Sales Invoice (Domestic) | Credit Terms n/60 | Date: 12/31/2016 | Document No. 318525 |
| Richmond, VA |
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| 23126 | Customer ID: ZIEGL0005 |
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| Bill of Lading |
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| Name: Scott Ziegler |
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| |
| Quantity Shipped
1 | Macbook Pro 15.4 inch | Unit Price 1,460.00 | Discounts
0.00 | Extension
$1,460.00 |
| 1 | 65 inch Sony TV | 1,980.00 | 0.00 | $1,980.00 |
| 1 | Garmin DriveStart 61 LMT | 212.00 | 0.00 | $212.00 |
| 1 | HP OfficeJet Pro 8710 | 147.00 | 0.00 | $147.00 |
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| Total $3,799.00 |
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Management Control Systems Performance Measurement Evaluation And Incentives
Authors: Kenneth Merchant, Wim Van Der Stede
3rd Edition
0273737619, 978-0273737612
