Question

Identify five controls activities that you would commonly find in a men's clothing department of a major department store. Identify the control objective associated with each of these activities (Case 3.7 Saks Fifth Avenue).

Answer 1

five controls activities that you would commonly find in a men's clothing department of a major department store are-

1)Computer based cash registers:

Such systems automatically record various types of relevant data. Examples include employee codes, items and quantity purchased, totals due, type of payment, etc. This is a form of segregation of duties, which increases the difficulty to input fraudulent data, since the limited user interface allowed to the employee

2)Limited authorization to edit sales:

Occasionally, departure from normal sales procedure occur, like returns, change in sale prices, and corrections for improper entries. Limited authorization powers are entrusted to key personnel, and can include a two person concept to document such departures. This is also another segregation of duties

3)Third party counting of cash:

At the end of a shift, the employee turns in his or her change drawer to another department for counting. That department has the list of transactions associated with that cash drawer, and compares the cash, checks, coupons, and credit card receipts to the list of transactions listed. Any deviations can alert management to either incorrect entry procedures, or employee theft. This is also a segregation of duties.

4)Inventory:

Periodic inventory of goods allows comparison of physical goods . It is better to have an independent person, whether a private company or someone from another department. However, use of same department’s personnel is acceptable as long as the personnel rotate inventorying different sections. The independent inventory provides a segregation of duties. 5)Video surveillance:

Video surveillance can provide both detection and preventative measures to prevent both shoplifting and employee theft. The objective is to catch the crime in progress, provide evidence, and provide incentive not to steal.