Coodner Brothers, Inc.

Topics: Procurement, Internal control, Supply chain management terms Pages: 2 (494 words) Published: October 13, 2012
1.List what you believe should have been the three to five key internal control objectives of Goodner’s Huntington sales office. •Existence – Record the purchase orders in standard form as soon as sales reps receive them. •Rights and obligations – Limit rights for sales reps. •Completeness – Record the purchase order, ship the inventory, and receive payment. •Valuation – Keep accuracy for the value.

2.List the key internal control weaknesses that were evident in the Huntington unit’s operations. •Ineffective controls of physically counting
-Sales rep (Woody) involved in physically counting and took the count sheets for both team to the sales office, which mean offered him chances to manipulate the numbers •Ineffective accounting procedures that do not tie recorded purchases to receiving data -The sales reps often jotted the details of a transaction on a piece of scrap paper and entered information later either by themselves or others. •Unrestricted access to the computerized accounting system -Unit’s sales manager, two sales reps and bookkeeper had unrestricted access to the accounting system. •Lack of separation of duties

-Sales reps had direct access to the inventory storage areas -Sales reps can load and delivered customer orders themselves -Sales reps had unrestricted access to the computerized accounting system -Sales reps involved physical counting

-Receptionist doubled as a secretary
Lack of physical safeguards
-No physical safeguards for inventory.

3.Develop one or more control policies or procedures to alleviate the control weaknesses you identified in responding to Question 2. •Ineffective controls of physically counting
-Sales rep should not involve in physically counting. And the counting documents should be sent to the sales office directly by team leaders themselves. •Ineffective accounting procedures that do not tie recorded purchases to receiving data -Detail of purchase orders should be record by purchase...
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