1. The purchasing department employee works for meager wages and eventually conspires with the supplier contact...

1. The purchasing department employee works for meager wages and eventually conspires with the supplier contact to steal supplies for personal use. Which controls are adequate to deal with these types of situations?

2. Suggest controls you would recommend to mitigate these employee stealing for personl use. Eplain each suggestion in detail.

Solutions

Expert Solution

The internal control for inventories are adequate to deal with these types of situations.

controls to be recommend to mitigate these employee stealing for personl use are as follows:

Distribution and segregation of duties: This means the company should have the duties assigned to different people rather than one sole person. The person who is purchasing the inventory should be different from the person maintaining the records. This way there are less chances of stealing as the records cannot be modified or misrepresented by the person who is purchasing or procuring the inventory.

Job rotation in the company: There should be a job rotation as this will discourage the employee to engage in long term relation with the supplier in ling term schemes to steal. This is because the person who is in charge of the inventory has the feeling that if the next person comes he may discover the fraud or theft. This will discourage the person engage in stealing the supplies for personal use.

Use of mechanical devices: Now a day’s barcoding scanner can be used to protect the assets. It makes very difficult to steal the inventory and modify the records. Thus discouraging the employee to get into such situation.

ekkarill92 answered 1 year ago

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