Question
J Company is suffering from working capital problems and the directors wish to make several changes to internal controls over purchases, inventory and sales in
J Company is suffering from working capital problems and the directors wish to make several changes to internal controls over purchases, inventory and sales in order to try and improve cash flow. They feel that currently there is no real commitment or belief in the internal controls system. The sales director keeps high levels of finished goods on site to give customers plenty of choice and the purchasing manager keeps high levels of raw materials as he is afraid of shortages. Each blames the other for J Company's current problems. Suppliers are paid within 25 days despite agreed terms being 30 days because the CEO wishes to maintain good relationships with them. Customers are encouraged to take credit with J Company in order to increase sales. Staff are generally well paid (with sales related bonuses) and staff turnover is low. J Company is seen as a good place to work and management are respected. Which of the following are likely to be reasons that embedding the principles of internal controls in J's culture will be difficult?
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