Goodner Brother Inc Essay

Custom Student Mr. Teacher ENG 1001-04 2 September 2016

Goodner Brother Inc

1. Key internal control objectives of Goodner’s Huntington Sales Office: a. Controls should be able to prevent and detect fraud. Authorization should be required for every sales transaction. Woody would not be able to sell returned tires from customers and consignees for his own benefits if all sales transactions needed prior management’s approval. b. Controls should aim at safeguarding physical assets. Sales Office should ensure that only certain authorized personnel could get access to the warehouse and at any time security should be enforced to minimize inventory shortages and shrinkages c. Controls should ensure the completeness and accuracy of accounting records. Woody would charge merchandise that he sold for his benefit to the accounts of large volume customers. Or in other words, Woody has altered the nature of the transactions by inflating the number of tires the customers actually ordered.

2. Key internal control weaknesses that were evident in the Huntington unit’s operations a. Strong reliance on the honesty and integrity of the employees they hired. The company recruited its personnel basing off references and recommendations; however this practice could not make up for the lack of a strong internal control system. b. Insufficient personnel. Its crew of 10 to 12 people had to staff its 14 sales outlets. Many of Goodner’s personnel had to take on double positions such as Goodner’s secretary who worked as both the receptionist and the bookkeeper. c. Unrestricted access to the accounting system by the unit’s sales manager and two sales representatives.

This gave Woody a good opportunity to commit fraud. d. Lack of security for its tire inventory, which typically ranged from $300,000 to $700,000 per each sales outlet. 3. Control policies or procedures to alleviate the control weaknesses identified in question 2: a. Authorization of transactions: Management approval should be required on all transactions. Otherwise, the tire purchase request should be made by one individual and got approved by a different one. b. Segregation of duties: The secretary should not act as both the secretary and the receptionist. Report on returned items should be generated by one individual and then another individual should receive and put the returned items back to stock.

Free Goodner Brother Inc Essay Sample

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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 2 September 2016

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