Alterations to physical inventory counts and perpetual inventory records
Unauthorized access to inventory records.
Fraud
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Limit physical and logical access to the inventory records to authorized employees.
Require that all adjustments to inventory records be approved by a responsible official.
Examine physical inventory counts and perpetual inventory records for evidence of fraud
Terminate any employees that commit fraud
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5
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Many customer refunds and credits.
Collusion among customers, salespersons, common carriers, and the shipping and accounting departments of Covington.
Poor product quality
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Segregate duties so refunds and credits are authorized by responsible employees not otherwise involved in sales, shipping, or maintaining accounts receivable.
Fix production problems
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6
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Many original documents are missing or lost. However, there are substitute copies of all missing originals.
Failure to use pre-numbered documents.
Fraud was perpetrated, original copies of the documents were destroyed, and they were replaced by photocopies.
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Use pre-numbered documents to facilitate the control and identification of documents.
Investigate all instances where originals are missing and photocopies are used.
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7
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