Problems/Cases: 4-4

(1&2)

The finished goods warehouse delivers

goods to the shipping department,
accompanied by the picking ticket.
After checking the goods against the
picking ticket, the shipping employee
signs the picking ticket and gives it to
the warehouse employee. Then the
shipping department prepares a threepart shipping notice, one copy of which
serves as a packing slip. A dishonest
warehouse employee had been forging
picking ticket documents, thereby
having goods shipped to an accomplice.

Condition
A dishonest warehouse employee
had been forging picking ticket
documents, thereby having goods
shipped to an accomplice

Criteria
Picking tickets should be pre-numbered
and another trusted employee should be
assigned in receiving the signed picking
tickets from the shipping employee
instead of giving it back to the warehouse
employee.

Cause
We have pondered upon, that the cause
why such fraud happened was due to the
lack of internal control by the management
assigned and that there is no proper
segregation of duties wherein it opens the
possibility for the employees to commit
unethical actions.

Effect
This situation brings forth a problem about
the risk of incurring losses and inventory
on hand is not a representative of the total
actual inventory that the company has,

Recommendati
on

Picking tickets must be prenumbered to have a control as

to the quantity and frequency
of orders to be sent to the
shipping department
Manager of the warehouse
department must appoint an
employee who will objectively
verify whether the signed
picking tickets contain the
exact orders authorized to be
shipped.

Warehouse managers at
Troy, Inc. have been
discovering inventory
shortages. When they
investigate the
paperwork transferring
the goods from
receiving to the
warehouse, the
evidence indicates that
the goods had arrived.

Condition
Warehouse managers of troy, Inc.
discovered that there was a shortage of
goods from receiving department to the
warehouse department, but then there
were evidences that the goods had
arrived.

Criteria
The company should observe proper
monitoring and surveillance over the
inventory received from the receiving
department up to the transferring of such
inventory to the warehouse department.

Cause
Paperwork from the receiving department
is misappropriated and goods may be
stolen. Safeguarding of the assets is
overlooked.

Effect
Loss of cost effectiveness: you
cannot recover the amount that
cost you to acquire such
inventories
Poor planning: meeting the
required quantities needed for
operations will now be difficult
Customer dissatisfaction:
unavailability of resources due to
inventory shortage would only
mean delayed production and
shipment to customer

Recommendati
on
We further
recommend that
there should be CCTV cameras
installed on crucial areas of the
warehouse and that someone,
aside from those personnel who
have access in the warehouse,
should be assigned to monitor
those CCTV cameras