Homework Help is Here – Start Your Trial Now!
Business
Accounting
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

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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Answer #2 only 

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 employee theft. Many businesses do not report employee theft to law enforcement, often because they do not want to damage their reputation or because they have weak internal controls in place. Segregation of duties is a key component of internal controls that involves assigning different tasks and responsibilities to different employees, which can help prevent and detect employee theft. To detect employee theft, businesses can use techniques such as surprise audits, data analysis, and surveillance. To prevent and deter employee theft, businesses can implement strong internal controls, such as segregation of duties, background checks, and employee training, as well as create a positive corporate culture and conduct regular audits. My question: What else can be done to help detect the theft? can you use internal control methods.
Transcribed Image Text: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 employee theft. Many businesses do not report employee theft to law enforcement, often because they do not want to damage their reputation or because they have weak internal controls in place. Segregation of duties is a key component of internal controls that involves assigning different tasks and responsibilities to different employees, which can help prevent and detect employee theft. To detect employee theft, businesses can use techniques such as surprise audits, data analysis, and surveillance. To prevent and deter employee theft, businesses can implement strong internal controls, such as segregation of duties, background checks, and employee training, as well as create a positive corporate culture and conduct regular audits. My question: What else can be done to help detect the theft? can you use internal control methods.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS