A company uses inventory tags that are electronically scanned into its accounting information system to track receipt, movement and removal of items of inventory from the manufacturing floor. Prior to producing quarterly and annual financial statements the company performs a physical count of inventory. The typical outcome of the physical count is that journal entries must be made after the count to correct the inventory accounts and records because some employee theft and unrecorded waste always occurs.
Does the occurrence of inventory loss that the company routinely records mean that a deficiency in ICFR exists? Why or why not?