PROBLEM: Employees can commit and conceal fraud when they have access to physical inventory (custody) and to inventory records (recording).
SOLUTION: This can be prevented by restricting storeroom access to authorized employees. Likewise, access to inventory records should be limited to authorized employees. Where possible, no storeroom employee should have access to both the physical inventory and the inventory records.
A cashier cashed a check from a customer in payment of an account receivable, pocketed the cash, and concealed the theft by properly posting the receipt to the customer’s account in the accounts receivable ledger.
