Question

All-Around Sound Co. discovered a fraud whereby one of its front office administrative em- ployees used company funds to purchase goods, such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in delivery frequency from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter the description or change the quantity on an invoice in order to explain the cost on the bill.

What general internal control weaknesses?

Answer 1

The internal control weakness in here is the lack of segregation of duty.

Segregation of Duties (also known as Seperation of duties) is the concept of having more than one person required to complete a task. In business the separation by sharing of more than one individual in one single task is an internal control intended to prevent fraud and error. Hence the person who makes order cannot receive the goods. The concept of segregation of duty is that the maker should not be the checker.