The Complexity Of Coach Inc.

862 Words4 Pages
Based on the complexity of Coach Inc. (Coach) inventory system and policy, I identified potential risks that could affect Coach’s productivity and carefully chosen critical extended procedures to detect possible fraud and misstatement. Analysis and overview of potential fraud risks related to Coach Inc. inventory policy. Coach is exposed to (1) employee theft; if proper inventory controls and segregation of duties are not correctly implemented, employees could steal items after delivery to the warehouse, or may have goods delivered to a location that would allow them to keep the items for personal use. (2) Fraud through falsified records; if there is no purchase order authorization control in place, an employee could create bogus purchase inventory orders to request payment from Coach and keep the money for personal use. (3) Theft and financial fraud; if there is no segregation of duties between the person in charge of receiving the customer’s payments and the employee updating the account receivable account, an employee (s) in charge of accounts receivables could embezzle money by “lapping” customer payments. Extended procedures to detect misstatement/theft of inventory and financial fraud. To detect possible misstatement or theft of inventory, (1) I will search for unrecorded liabilities by looking for open purchase orders, unmatched vendor invoices and unmatched receiving reports. (2) I will investigate suspicious behaviors from employees such living above their means,

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