Lavonda Lewis was a warehouse manager for Wyoming Oilfield Supply, a business that operated across eight Western states. She was an old pro and had known most of the other warehouse managers for many years. Around December each year, auditors would come to do a physical count of the inventory at each warehouse. Recently Lavonda's brother started his own drilling company and persuaded Lavonda to "loan" him 80 joints of 5-inch drill pipe to use for his first well. He promised to have it back to Lavonda by December, but the well encountered problems, and the pipe was still in the ground. Lavonda knew the auditors were on the way, so she called her friend Larry, who ran another Wyoming Oilfield warehouse. "Send me over 80 joints of 5-inch pipe tomorrow, and I'll get them back to you ASAP," said Lavonda. When the auditors came, all the pipe on the books was accounted for, and they filed a "no-exception" report.

Questions:

1. What could the company and/or the auditors do in the future to detect this kind of fraudulent practice?

2. How does this kind of inventory movement affect the financial performance of the company?

Your responses should be well-thought-out and specific in detail. Do not copy the above questions and insert them into your response. Please respond to at least one other student on their ideas and solutions.