A purchasing agent orders materials from a supplier that he partially owns.
1) Require a purchase requisition from an operating department as authorization for preparation of all purchase orders.
2) Require purchasing manager, before approving PO to a) review the purchase requisition and b) ensure that orders are placed with only
Receiving dock personnel steal inventory and then claim the inventory was sent to the warehouse.
1) Count all deliveries and record counts on a receiving report.
2) Require warehouse personnel to count the goods received when they are transferred to the warehouse and acknowledge receipt of the specified quantity by signing the receiving report.
3) Ha
An unordered supply of laser printer paper delivered to the office is accepted and paid for because the "price was right." After jamming all of the laser printers, however, it becomes obvious that the "bargain" paper is of inferior quality.
1) The problem here is that office employees are seldom trained about proper procedures for receiving, bc it is assumed that all goods are delivered only to the warehouse. Office employees, like receiving employees, need to be trained not to accept delive
The company fails to take advantage of a 1% discount for promptly paying a vendor invoice.
1) File invoices by discount date.
2) Maintain a cash budget.
A company i late in paying a particular invoice. Consequently, a second invoice is sent, which crossed the first invoice's payment in the mail. The second invoice is submitted for processing and also paid.
1) Review related supporting voucher package or records (receiving report and purchase order) before approving an invoice for payment.
2) Change the status of the invoice and its supporting records from "pending" to "paid" after payment is made.
3) Deface
Inventory records show that an adequate supply of copy paper should be in stock, but none is available on the supply shelf.
1) Count physical inventory periodically
2) Correct system records using the count.
The inventory records are incorrectly updated when a receiving dock employee enters the wrong product number at the terminal.
1) Use closed-loop verification - the item number is entered as input, the system displays the corresponding item description, and the user is asked to verify that it is the desired item.
2) Use bar codes or RFID tags to eliminate the need to enter the it
A clerical employee obtains a blank check and writes a large amount payable to a fictitious company. The employee then cashes the check.
1) Store unused blank checks in a secure location.
2) Segregate duties by having the person reconciling the bank account be different from the person making the payments.
3) Segregate duties by having the person signing the check be different from the per
A fictitious invoice is received and a check is issued to pay for goods that were never ordered or delivered.
1) Program the system so that it only prints checks to approved suppliers listed in the database.
2) Restrict access to the supplier master data.
3) Require appropriate background checks and management approvals before adding a new supplier to the supplie
The petty cash custodian confesses to having "borrowed" $12,000 over the last 5 years.
1) Create a petty cash imp rest fund and only replenish it based on receipts documenting how the funds were used.
2) Conduct periodic surprise counts of petty cash on hand to verify that the total of cash plus receipts equals the fund amount.
The purchasing agent adds a new record to the supplier master file. The company does not exist. Subsequently the purchasing agent submits invoices from the fake company for various cleaning services. The invoices are paid.
1) Restrict access to the supplier master file.
2) Require appropriate background checks and management approval before adding a new supplier to the supplier master data file.
3) Monitor on a regular basis all changes made to the supplier master data.
A clerk affixes a price tag intended for a low-end flat panel TV to a top-of-the-line model. The clerk's friend then purchases that item, which the clerk scans at the checkout counter.
1) Restrict access to price tags so that the cashiers do not have access to price tags.
2) Segregate duties by not letting stocking clerks work as cashiers.
3) Monitor check-out clerks, either live or by closed-circuit cameras, to deter fraud.
4) Hire hon
Purchasing Requisition
A document or electronic fromt hat identifies the requisitioner, specifies the delivery location and date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a vendor.
Purchase Order
A document that formally requests a vendor to sell and deliver specified products at designated prices. It is also a promise to pay and becomes a contract once the vendor accepts it.
Receiving Report
A document that records details about each delivery, including the date received shipper, vendor, quality received.