Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss somepreventive measures this firm may wish to implement.
Bern Fly Rod Company is a small manufacturer of high-quality graphite fly-fishing rods. It sells itsproducts to fly-fishing shops throughout the United States and Canada. Bern began as a small companywith four salespeople, all family members of the owner. Due to the high popularity and recent growth offly-fishing, Bern now employs a sales force of 16, and for the first time employs nonfamily members. Thesalespeople travel around the country giving fly-casting demos of their new models. Once the salesorders are generated, inventory availability is determined and, if necessary, the salesperson sends theorder directly to the manufacturing department for immediate production. Sales staff compensation is tieddirectly to their sales figures. Bern’s financial statements for the December year-end reflectunprecedented sales, 35 percent higher than last year. Further, sales for December account for 40percent of all sales. Last year, December sales accounted for only 20 percent of all sales
Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss somepreventive measures this firm may wish to implement.
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