Question

When some people think about inventory theft, they imagine a shoplifter running out of a store with goods stuffed inside a jacket or bag. But that’s not what the managers at the Famous Footwear store on Chicago’s Madison Street were dealing with. Their own employees were the ones stealing the inventory. One scam involved dishonest cashiers who would let their friends take a pair of Skechers without paying for them. To make it look like the shoes had been bought, cashiers would ring up a sale, but instead of charging $50 for shoes, they would charge only $2 for a bottle of shoe polish. When the company’s managers saw a drop in gross profit, they decided to put the accounting system to work. In just two years, the company cut its Madison Street inventory losses in half. Here’s how a newspaper described the store’s improvements:

These improvements in inventory control came as welcome news for investors and creditors of Brown Shoe Company, the company that owns Famous Footwear.
Required:
1. Explain how the register-monitoring system would allow Famous Footwear to cut down on employee theft.
2. Think of and describe at least four different parties that are harmed by the type of inventory theft described in this case.



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  • CreatedFebruary 27, 2015
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