Westchester Dis Case
Westchester Dis.
1. What went wrong at Westchester? Summarize the case facts and key causes of the current situation. Your response should EXPLICITLY consider the COSO Framework.
Due to an informal corporate environment, Westchester Distributing, Inc. experienced a situation that could have been avoided had the control environment been in place. Carter Mario, a salesman for Westchester, defrauded his employer by falsifying expense reports and bribing a customer. George Pavlov, a sales manager, not only cooperated with Mario, but was also guilty of the same acts. After having a kickback deal with a customer go bad, Pavlov went to the VP of Administration, Joe Roberts, for help. Since Joe signs all neon signs out of inventory and because Mario had promised the customer three signs, they needed Joe to complete the transaction. Unfortunately, …show more content…
Vince needs to set the control tone for the distributorship, meet with his employees to discuss how compliance with the law is essential for being employed at Westchester. Another action Patton needs to take is to hire an outside audit professional/company to execute an investigation to review all employees and how they conduct business on behalf of Westchester to uncover any other possible injustices, and provide a report of recommendations on how to prevent this in the future. This risk assessment should also result in an internal position within Westchester. Recommendations that might come up include: having employees use credit cards instead of cash for better record keeping, requiring actual invoices instead of blank one that are filled in, better safeguarding of inventory, and reconciling inventory counts to accounting records, formal meetings with employees before they sign the annual Code of Conduct, and Patton being more engaged on the warehouse
1. What went wrong at Westchester? Summarize the case facts and key causes of the current situation. Your response should EXPLICITLY consider the COSO Framework.
Due to an informal corporate environment, Westchester Distributing, Inc. experienced a situation that could have been avoided had the control environment been in place. Carter Mario, a salesman for Westchester, defrauded his employer by falsifying expense reports and bribing a customer. George Pavlov, a sales manager, not only cooperated with Mario, but was also guilty of the same acts. After having a kickback deal with a customer go bad, Pavlov went to the VP of Administration, Joe Roberts, for help. Since Joe signs all neon signs out of inventory and because Mario had promised the customer three signs, they needed Joe to complete the transaction. Unfortunately, …show more content…
Vince needs to set the control tone for the distributorship, meet with his employees to discuss how compliance with the law is essential for being employed at Westchester. Another action Patton needs to take is to hire an outside audit professional/company to execute an investigation to review all employees and how they conduct business on behalf of Westchester to uncover any other possible injustices, and provide a report of recommendations on how to prevent this in the future. This risk assessment should also result in an internal position within Westchester. Recommendations that might come up include: having employees use credit cards instead of cash for better record keeping, requiring actual invoices instead of blank one that are filled in, better safeguarding of inventory, and reconciling inventory counts to accounting records, formal meetings with employees before they sign the annual Code of Conduct, and Patton being more engaged on the warehouse