Question

Yolanda Auremar, the GM of the Sand Castle Hotel has learned that the controller’s office paid an invoice for office supplies that were never delivered. She now knows that the process of purchasing all hotel supplies, verifying their delivery, accounting for them in inventory, and properly paying invoices for them is in need of a thorough review.

Questions

1. What would be other clues that the accounts payable system is in need of review?

2. Which individuals within the hotel need to be involved in this review process?

3. What would be the likely consequence(s) if you did not institute the review?

Answer 1

It is common that in every business employees will involve in certain type of fraudulent activities, to divert funds.

Clues for accounts payable being manipulated, there might exist payments to accounts payable that never exists, there may also exist excess payments to certain suppliers who are related to the employees.

The following individuals should involve in the review process, the finance head, general manager, cashier, purchase department head.

If the issue is not instituted in a proper manner, the fraudulent amounts will get increased and as a result it will lead to failure of the functioning of the hotel, working capital will get blocked. It may also lead to closure of the hotel.