Question

What internal control procedure(s) would best prevent or detect the following problems?
a. A production order was initiated for a product that was already overstocked in the company’s warehouse.
b. A production employee stole items of work-in-process inventory.
c. The “rush-order” tag on a partially completed production job became detached from the materials and lost, resulting in a costly delay.
d. A production employee entered a materials requisition form into the system in order to steal $300 worth of parts from the raw materials storeroom.
e. A production worker entering job-time data on an online terminal mistakenly entered 3,000 instead of 300 in the “quantity-completed” field.
f. A production worker entering job-time data on an online terminal mistakenly posted the completion of operation 562 to production order 7569 instead of production order 7596.
g. A parts storeroom clerk issued parts in quantities 10% lower than those indicated on several materials requisitions and stole the excess quantities.
h. A production manager stole several expensive machines and covered up the loss by submitting a form to the accounting department indicating that the missing machines were obsolete and should be written off as worthless.
i. The quantity-on-hand balance for a key component shows a negative balance.
j. A factory supervisor accessed the operations list file and inflated the standards for work completed in his department. Consequently, future performance reports show favorable budget variances for that department.
k. A factory supervisor wrote off a robotic assembly machine as being sold for salvage, but actually sold the machine and pocketed the proceeds.
l. Overproduction of a slow-moving product resulted in excessive inventory that had to eventually be marked down and sold at a loss.



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  • CreatedDecember 19, 2014
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