Discuss the potential for abuse and fraud in this system. What are the controls that should be implemented to reduce the risks?
Gaboner Co. maintains a large fleet of automobiles, trucks, and vans for use by their service and sales force. Supervisors in the various departments maintain the fixed asset records for these vehicles, including routine maintenance, repairs, and mileage information. This information is periodically submitted to the fixed asset department, which uses it to calculate
To assure a reliable fleet, the company disposes of vehicles when they accumulate 80,000 miles of service. Depending on usage, some vehicles reach this point sooner than others. When a vehicle reaches the 80,000 miles, the supervisor is authorized to use it in trade for a new replacement vehicle or to sell it privately. Employees of the company are given the first option to bid on theretired vehicles. Upon disposal of the vehicle, the supervisor submits a disposal report to the fixed asset department, which writes off the asset.
Discuss the potential for abuse and fraud in this system. What are the controls that should be implemented to reduce the risks?
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