In the case of Goodner Brothers, Inc. , the six key control weakness were no proper segregation of duties, no proper procedure on recording documents, lacking monitoring on performance review, low gross profit margin than benchmark, no control on accessing to the accounting system and inventory storage and too depends on the honesty of the employees. Woody Robinson know very well that the company have these weaknesses that give him the chances to enter the hole to start the fraud activities. Firstly, there is no proper segregation of duties in the sales outlet. In a company, it was important that the duties of the employees are clearly separate to make sure that employees will not have the chance to carry out the fraud activities. However, Goodner Brothers sales outlet let a sales manager supervise other employees while he or she worked as sales district. Besides, there are employees worked as a receptionist doubled as a secretary and a bookkeeper. The remaining employees who are taking part in delivering the tires are also worked in unit’s inventory warehouse which they actually doing other things that are not suppose to be their duties and this situation had increase the risk of fraud and errors. We acknowledge that during peak sales season, sales reps frequently loaded the product and delivered the customer orders themselves where the work should be done by the inventory department.
There is no proper procedure on recording document. Normally when there is order from customer and our own company the clerk or secretary should prepare purchase orders, sales orders, credit memos and other accounting documents. But the sales reps noted those details only on a piece of scrap paper instead of in the computer on timely basis which increase the possibility of losing the records. Besides, the details of the documents that noted down in the scrap paper may also be change by the people who intend to do so. In additions, sales reps will then passed these documents noted...
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