Inventory and Other Assets Flashcards
What are two ways a person can misappropriate a company asset?
- Misused
- Stolen
True or False : In many cases, the perpetrator’s coworkers are fully aware that the individual is stealing company assets, yet they do not report the crime.
True.
A ______ _____ is a theft of inventory method that the perpetrator needs an accomplice and cannot act alone.
False Sale
Dishonest employees sometimes falsify _____ ______ forms so they can remove inventory from a warehouse or stockroom.
Asset Transfer
If assets are intentionally purchased by the company and later misappropriated by the perpetrator, this is classified as what type of scheme?
Inventory Larceny Scheme
If an employee causes their company to purchase merchandise that the company does not need, this is classified as what type of scheme?
False Billing Scheme
One of the most common examples of an employee abusing the purchasing and receiving functions occurs when a person charged with receiving goods on the victim company’s behalf ______ the records of _______ ________.
falsifies - incoming shipments
A common way to eliminate delinquent receivables that result from theft schemes is to write off the receivables to accounts such as:
1.
2.
3.
Discounts and Allowances
Bad Debt Expense
Lost and Stolen Assets
What is unaccounted for reduction in the company’s inventory that results from error or theft?
Inventory Shrinkage
What are the two steps that inventory and other assets are tracked?
- Perpetual Inventory - ongoing count that records how much inventory should be available.
- Physical Count of Available Assets
What does it mean to force reconciliation of an account?
A simple method of concealing shrinkage by changing the perpetual inventory record so that it matches the physical inventory count.
Name 2 items that could be sampled on a statistical basis to help detect inventory schemes.
Receiving reports Perpetual inventory records Raw materials requisitions Shipping documents Job cost sheets
What are the four basic measures that might help prevent inventory fraud?
- Proper Documentation
- Separation of Duties (including approvals)
- Independent Checks
- Physical Safeguards
In addition to misappropriation of tangible noncash assets, organizations are vulnerable to theft of ________ _________, which can undermine their value, reputation and competitive advantages and result in legal liabilities.
Proprietary Information
Securities are the least likely asset to be misappropriated, yet the ________ ________ caused in security misappropriation cases has the potential to be extremely high.
Financial Damage
