ACC 423- 5-3 Assignment- Stealing Inventory vs Other Assets

Which of the following is not an example of safeguarding inventory? a. physical devices such as two-way mirrors, cameras, and alarms b. returning inventory that is defective or broken OC. matching receiving documents, purchase orders, and vendor's invoice Od. storing inventory in restricted areas

1. Match the description on the left with the type of theft on the right using Excel spreadsheet. See notes below. 1. Most common type of noncash theft 2. Goods shipped to an accomplice 3. Altering physical inventory counts to cover theft 4. Goods are stolen, then a receiving document is created showing fewer goods received a. Fraudulent write-off b. Unconcealed larceny c. Falsified shipping or receiving report d. Fraudulent shipment

Unconcealed larceny includes: stealing with no attempt to cover up the theft falsified receiving reports that cover up a theft by recording a shortage or “defective goods” altering inventory records to match the balance in the inventory account all of the above

Question 2 As the auditor of Sample Limited you note the following matters relating to the internal control of its sales system. i) The sales department accepts order without first checking the inventory level with the warehouse. ii) Goods are dispatched to customers without recording customer's signatures as proof of receipt of goods. iii) Orders of goods placed by customers are properly recorded but they are not forwarded timely to the dispatch department for fulfilling the order. a) For each of the above deficiencies, identify the possible impact on the company's operation and recommend a control to address it. b) Explain why an auditor cannot perform only test of control in an audit.

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The case: In this case, a medium-sized, family-owned business suffered a significant loss of inventory due to theft by several long-time employees. Overall: 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. 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 followings: 1. a measure that could have prevented the theft 2. a measure that could have detected the theft 3. a step to take once fraud is suspected. My work: Internal controls are protocols and procedures used by a business to protect its assets and maintain the accuracy of its financial records. Employee theft is a common problem that can have serious consequences for businesses, with 75% of businesses being affected by it and 33% going bankrupt due to…

Required information Potential Misstatements in the Auditing of Inventory Read the overview below and complete the activities that follow. Because of its importance and typically high dollar value on the balance sheet of a manufacturing entity, the audit of inventory is important and often high risk. As such, auditors must take additional care when auditing this area due to the capacity for both errors and fraud. CONCEPT REVIEW: When identifying misstatements in testing inventory, it is important to consider the control environment to determine if the misstatements found are indicators of client error or intentional fraud. 1. Inventories with a high risk of 2. Purchasing and cash disbursements can provide opportunity for by employees 3. considering information about the client and its environment, the auditors must assess the risks of material misstatement related to assertions about inventory may be warranted as a signficant risk 5. 4 Audit procedures for consignment inventory could…

Question 2 What internal control or procedure(s) would provide protection against the following threats? Workers on the shipping dock steal goods, claiming that the inventory shortages reflect errors in the inventory records. An employee authorizes a credit memo for a sales return when the goods were never actually returned A waiter steals cash by destroying the customer sales ticket for customers who paid cash. A business loses all information about amounts owed by customers in Gaza City because the master database for that office was destroyed in a fire. The cashier steals funds by cashing several checks from customers.

Internal Control Principles Pampillonia Fruits Market took the following actions to improve internal controls. For each of the following actions, identify the internal control principle the company followed. a. The recordkeeper is prohibited from having control over cash. b. An insurance (bonding) policy is purchased against losses from theft by a cashier. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Detailed records of inventory are kept to ensure items lost or stolen do not go unnoticed. e. Digital time clocks are used to register which employees are at work at what times. f. External auditors are regularly hired to evaluated internal controls. 1

The separation of operational responsibility from record keeping is meant to prevent different types of misstatements than the separation of the custody of assets from accounting. Explain the difference in the purposes of these two types of separation of duties. For each of the following, give an example of a physical control the client can use to protect the asset or record: a. Petty cash b. Cash received by retail clerks c. Accounts receivable records d. Raw material inventory e. Perishable tools f. Manufacturing equipment

Question 26 When an audit team selects a sample of shipping documents from the company's shipping logs and traces to copies of sales invoices the auditor is trying to find evidence that:     Shipments to customers were invoiced     Shipments to customers were recorded as sales in the sales journal     Recorded sales from the sales journal were shipped.     Inventory records were properly relieved.

Which of the following are examples of the misappropriation of assets? O A. An employee theft of inventory. O B. A kickback scheme in the purchasing function. OC. An employee overstates an expense reimbursement request after a company trip. O D. all of the above Click to select your answer. 11:59pm 99+ ch