QUESTION 3

(a) The following are two situations that can have negative impacts to organisations. Indicate how each of these situations affects the company's internal environment and what could the company do in order to reduce the negative impacts.

(i) The company rewards employees strictly based on departmental financial results due to the difficulties in using other measures of performance.

(ii) The company has no policies in accepting gifts from suppliers and other business contacts.

(b) Examine each of the situation below and propose ONE (1) appropriate control procedure that can be implemented in order to prevent the errors and fraud from happening.

(i) Hardcopy invoices are usually sent to customers by mail or delivery service. In some instances, customers complained they did not receive the invoices and another copy had to be sent again.

(ii) A warehouse is equipped with security cameras to prevent theft. For the past two months, the employees have reported a few theft incidents.

(iii) Employees responsible in handling sales observed that lately, many customers' orders could not be shipped out due to stock-out of the company's inventories.

(iv) Purchasing of supplies from the supplier is usually done through a computerised system. Last week, a batch of supply came in but from an unauthorised supplier.

(v) Every month, the company has to write off some inventories since the physical count does not tally with the numbers in the system. The employees suspect this could be due to their inability to track the exact movement of inventories in the warehouse.