The company should establish an independent internal audit team, consist of experience inventory managers. Since Woody, as sales representative, had unrestricted access to the accounting system, the company did not implement an appropriate segregation of duties, which in turn, it allowed Woody to easily perpetrate the fraud.
Furthermore, it should improve inventory management, particularly related to reruns and defective tires, by having a systems and processes in place that identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status.
However, the CPA firm should have advice the company about the benefits of having a effective and efficient internal controls system.
Their ERP system was more characteristic for small-size companies rather than large-size companies such as Goodner Brothers, Inc. In order to achieve their ambitious operational and strategic goals, the company significantly cut on operating expenses, including expenditures on internal control measures, which in turn, it significantly exposed them to fraud risk.
Develop one or more control policies or procedures to alleviate the control weaknesses you identified in responding to question 2. He considered that the shrinkage wan not excessive; thus, it was not worth it scheduling a meeting to discuss the reasons or take a recount action.
In addition, the managers should be able to run audit trail test and look for red flags, such as modification of journal entries on the regular basis related to certain employee, particularly if those modification are done past 30 days. Internal control policies that would alleviate the control weaknesses should be the following: Your tutorial is words and gives you examples of controls missing or not working, ideas about how to fix it and other parties besides Woody that contributed to the problem s.
The company should purchase adequate accounting ERP system and implement proper separation of duties, where each employee would have access to one functional side of the purchasing cycle.
Goodner Brothers sold tires from fourteen sales offices scattered across the Midwest and the eastern seaboard. Typical controls - Segregation of duties between members that initiative, approve, implement, and record - Procedures to authorize transactions - Requirements for documentation and audit trail before processing transaction - Limitation to physical access In this case, here are the key controls that would have been helpful: This means that besides following up on employment references and background check, the company should also do credit check on prospective and current employees and look for significant debt structure, which would raise some warning flags.
Instead of being a rubber stamp manager, he could have been more alert and professional. Thus, he may also take some of the responsibility for the inventory losses Goodner suffered.
Besides Woody Robinson, what other parties were at least partially responsible for the inventory losses Goodner suffered? The text does not state whether auditing of the internal controls was part of the audit plan and whether the company paid for those services.
The company should have a proper check on prospective employees. The company had inappropriate accounting enterprise resource planning ERP system. Woody worked as a sales representative for the Goodner sales office in Huntington.
It should also update the job description and duties for all the mangers, where they should look for red flag and follow up on customer complaints, particularly if there are significant number of complaints being submitted towards certain employee.
The company had in my opinion inadequate business strategy that was heavily focused on increasing sales, and put little emphasis of having extensive system of internal controls. The company should revisit their business strategy and set up more realistic operational and strategic goals, which in turn, it would enabled them to have a larger budget devoted to internal controls efficiency; thus, decreasing their exposure to fraud risk.
He was able to do majority of the functions characteristic to the purchasing cycle such as authorize the purchase orders of the well-established customers, approve the purchase order returns, and issue credit memos. This is NOT summary of the embezzlement and includes weaknesses as "bullet points" so you can write it up in your own words.
Besides Woody Robinson, what other parties were at least partially responsible for the inventory losses Goodner suffered?
The company relied heavily on the honesty and integrity of employees they hired instead of implementing an extensive system of internal controls. The company should perform periodic performance evaluation on their current employees.Goodner Brother Case Internal Control 1) List what you believe should have been the three to five key internal control objectives of Goodner’s Huntington sales office.
Goodner Brothers 1. List what you believe should have been the three to five key internal controls objectives of Goodner's Huntington sales office.
2. List the key control weaknesses that were evident in the Huntington unit's. In the Goodner case, internal auditors were conducting their annual inventory counts of Goodner Brothers, Inc.
and determined that their numbers Show More More about Wilson Brother Limited Case. 1 - The Goodner Brothers Case introduction. List what you believe should have been the three to five key internal control objectives of Goodner’s Huntington sales office.
The Goodner’s Huntington sales office should have implemented the following internal control objectives: 1. The reliability of financial reporting, which relates to the timely and. Rose Samuel Instructor Angela Sneed ACC April 10, Case Goodner Brothers billsimas.com this case I will identify five key internal controls 5/5(2).
Goodner Brothers Inc. A Case Study By: weaknesses and identifying the parties that were at least partially responsible for the inventory losses Goodner Brother Inc. suffered. Summary Of The case about the Goodner Brothers Company informs the fraud committed by one of its employees, 86%(7).Download