Goodner Brother Inc Essay Example for Free

Goodner Brother Inc Essay1. Key internal swan objectives of Goodners 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 altogether sales proceeding needed prior managements approval. b. Controls should aim at safeguarding physical assets. Sales Office should ensure that only certain authoritative 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 account statement 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 we re evident in the Huntington units operations a. Strong reliance on the verity 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. meager personnel. Its crew of 10 to 12 people had to staff its 14 sales outlets. Many of Goodners personnel had to take on double positions such as Goodners secretary who worked as two the receptionist and the bookkeeper. c. Unrestricted access to the accounting system by the units 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 tir e purchase petition 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.