Coach Inc. is exposed to (1) employee theft; an employee may order special items to be stolen, steal items from a normal delivery, or may have the goods delivered to another location if proper inventory controls and segregation of duties are not implemented. (2) Fraud through the falsification records and a purchase inventory orders; an employee could be creating bogus invoices in order to request payment from Coach and keeping the money for personal use. (3) Theft and financial fraud; an employee in charge of accounts receivables could be embezzling money by posting a customer’s payment on another customer’s account and keeping the money instead of posting it to the accounts receivable account or a manger might be understating inventory balances on financial statements.
Extended procedures to detect fraud by the fabrication of purchase orders.
To detect fraudulent purchases request, and false entries of inventory to the general ledger; (1) …show more content…
(1) I will observe appropriate segregation of duties involving the person in charge of receiving the payment and the person in charge of updating the account receivable balances. (2) I will select a sample of customers paid invoices to calculate the average time for payment of invoices, inquire about late payment notices or collection notices sent from Coach to customers and contact customers to verify if previously payment was made to Coach. (3) I will ensure all invoices are stamped as paid, and compare the check number received and name against the account receivable log. (4) Lastly I will request a copy of the checks deposited on Coach Inc. bank account directly from their banking institution and ensure that the name and the amount of the check matches with the invoice and account receivable
Extended procedures to detect fraud by the fabrication of purchase orders.
To detect fraudulent purchases request, and false entries of inventory to the general ledger; (1) …show more content…
(1) I will observe appropriate segregation of duties involving the person in charge of receiving the payment and the person in charge of updating the account receivable balances. (2) I will select a sample of customers paid invoices to calculate the average time for payment of invoices, inquire about late payment notices or collection notices sent from Coach to customers and contact customers to verify if previously payment was made to Coach. (3) I will ensure all invoices are stamped as paid, and compare the check number received and name against the account receivable log. (4) Lastly I will request a copy of the checks deposited on Coach Inc. bank account directly from their banking institution and ensure that the name and the amount of the check matches with the invoice and account receivable