Part 1 Risk Analysis and Control Implementation

In this part of the assignment you will be given some risks involved with the sales transaction and determine what controls can be used to mitigate those risks. You will also have to analyze the business process to determine additional risks involved in the process. In order to give you a little assistance, we will give you a list of controls from which you are to select to mitigate the risk. Here are the controls that you are to select from:

1. Segregation of duties (If you give this answer, state what duties should be segregated.)

2. Using sequential prenumbered documents

3. Matching the customers purchase order with the sales order, shipping document and invoice to be sure the transaction is complete and no duplication occurs

4. Physical security for example, security cameras, security personnel and limiting access to certain areas

5. Reconciling the bank statement with the record of the deposits

6. Cancelling documents after they are completed for example, marking a sales order as shipped when the goods are sent to the customer

7. Having management periodically check the work of employees

8. Doing a periodic count of inventory to reconcile the records with the actual amount in inventory

9. Firing and prosecuting employees found defrauding the organization

10. Having customers send payments directly to a lock box at GBIs bank.

You are to analyze each of the following risks and from the above list you are to determine the THREE best controls that can be used to mitigate the risk. You must also explain in detail how the control would mitigate the risk. Following is an example of a risk and the possible controls.

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RISK 1: Employees in the shipping department steal goods from the company inventory while picking goods for shipment to a customer.

CONTROL 1:

CONTROL 2:

CONTROL 3:

RISK 2: The employee making the bank deposit alters the deposit slip and keeps some of the cash that was to be deposited in the bank.

CONTROL 1:

CONTROL 2:

CONTROL 3:

RISK 3: A GBI employee creates fake sales returns and issues cash refunds even though no goods were purchased by the customer and no goods are returned. The GBI employee pockets the money from the refund.

CONTROL 1:

CONTROL 2:

CONTROL 3:

RISK 4: The employee that picks and packs the goods is lazy and uses the picking list as the shipping report even though some of the items were not available and werent included in the shipment.

CONTROL 1:

CONTROL 2:

CONTROL 3:

RISK 5: An employee that receives customer payments commits lapping fraud by diverting a payment from the customers account and concealing it by posting payment from a different customer to the account.

CONTROL 1:

CONTROL 2:

CONTROL 3: