Essay on Westchester Distributing

1030 Words Apr 24th, 2016 5 Pages
Lisa Herman
ACCT 500D
Soczek
March 31, 2016
Westchester Distributing Case

Vince Patton at Westchester Distributing, Inc. is facing a quite a dilemma in the face of a recent fraud that has been uncovered. After two employees, Carter Mario and George Pavlov, sold beer to a customer with the offer of a “kickback” and subsequently submitted false expense reports to be reimbursed for the cash outlay, and after Joe Roberts, the VP of Administration perpetuated the act by misappropriating a neon sign to pay off the customer, Patton finds himself in violation of the California Alcoholic Beverage Control and in danger of being out of business for 45 days. In order to come to a solution for Mr. Patton, we must first discuss the specifics of
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Specifically, there are not controls put in place to ensure the validity of expense claims. No rule exists requiring receipts to be submitted, and broken bottle claims are made purely on the customers’/salesman’s/drivers’ word. Further, no impartial third parties check the reasonableness of the expenses claimed. In order to mitigate these issues, receipts for lunches and photographic evidence of broken bottles should be required to support expense reports and a member of the office staff should check the claims for reasonableness. Additionally, it is easy to falsely claim lunch receipts on expense reports. One way to deal with this is to reconcile them with daily call sheets, which are also submitted for approval. If an employee tries to submit an expense with a client for dinner but their call sheet says they visited in the morning, something is clearly not right. Another area that needs better internal control is the physical protection of assets. Anyone may check out merchandise and display materials at any time. Placing a guard in the warehouse with whom an employee checks out items will help with this process. The guard may restrict access to the items to those who need them for their job functions. Last, a customer service call shortly after a delivery will help to confirm that certain claims are valid. For example, in a customer service call, one may ask about

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