Answers For Each Question Should Be At Least 5 Sentences

Answers For Each Questions Should Be At Least 5 Sentences Plus APA Ref

How does a scheme in which an employee fraudulently orders merchandise for his personal use differ from a scheme in which an employee steals merchandise from his company's warehouse? A scheme where an employee fraudulently orders merchandise for personal use typically involves falsifying purchase requests or manipulating procurement processes to divert goods for personal benefit. This often includes creating fake purchase orders or inflating quantities to conceal the theft. Conversely, stealing merchandise from a company's warehouse generally involves direct physical removal of inventory without going through formal procurement channels, often using internal access or exploiting weaknesses in inventory controls. While both schemes involve theft, the former tends to involve deception during the ordering or procurement process, whereas the latter involves direct physical theft with potentially less interface with official records. Both types of theft undermine inventory integrity but require different detection and prevention strategies (Albrecht et al., 2019).

How do employees use falsified receiving reports as part of schemes to steal inventory? Employees utilize falsified receiving reports to conceal the misappropriation of inventory by fabricating documentation that shows goods were properly received when, in fact, they have been stolen. These falsified reports serve as a paper trail that disguises the theft, making it appear as if the inventory moved through legitimate channels. In some cases, employees may alter or forge receiving reports to match falsified purchase orders or to justify inventory discrepancies. The manipulation of receiving reports helps to avoid suspicion during audits and can be used to justify discrepancies or shortages. Maintaining rigorous review procedures for receiving reports and reconciling them with physical counts can help uncover such schemes (Rezaee & Bonaci, 2018).

Discuss how establishing a strong system of communication between employees and management can help deter and detect inventory larceny. A strong communication system fosters transparency and accountability within an organization, making it more difficult for employees to engage in theft without detection. Open channels of communication encourage employees to report suspicious activities or irregularities without fear of retaliation, increasing early detection. Regular meetings and reporting procedures keep management informed about inventory levels, discrepancies, and operational issues, reducing opportunities for theft. Furthermore, effective communication helps affirm a culture of integrity and ethical behavior, which acts as a deterrent to potential thieves. Proactive communication strategies are essential in creating an environment where theft is less likely to occur and easier to identify when it does (Louw & Wentzel, 2020).

If you suspected someone of being involved in a kickback scheme, what would you look for? Suspecting an individual of involvement in a kickback scheme involves looking for signs such as irregularities in invoices or payment approvals, frequent small payments to the same individual, or unusually close relationships with vendors. Additional indicators include a pattern of purchase approvals favoring certain suppliers without proper competitive bidding, or excessive business entertainment and favors exchanged between the employee and vendors. Unexplained wealth, sudden lifestyle changes, or reluctance to disclose financial information can also be red flags. It is also useful to examine communication records such as emails, texts, or phone logs for evidence of illicit communication. Analyzing these signs can help uncover potential kickback schemes and initiate further investigation (Cressey, 2018).

Paper For Above instruction

The distinction between schemes involving employee theft via fraudulent orders and direct theft from warehouses is crucial for developing effective internal controls. When an employee fraudulently orders merchandise for personal use, they typically manipulate procurement procedures, often by creating fake purchase requisitions or by exploiting weaknesses in the approval process (Albrecht et al., 2019). These schemes are characterized by deceit in the ordering process, often leaving behind a paper trail that can be examined during audits. On the other hand, theft from a warehouse usually involves the physical removal of inventory, often by employees with physical access, and may occur with little or no documentation if internal controls are weak (Rezaee & Bonaci, 2018). Both schemes exploit vulnerabilities but require different detection strategies, such as improving order verification procedures or enhancing physical security measures (Albrecht et al., 2019).

Employees use falsified receiving reports to perpetuate theft by creating false documentation that indicates goods were appropriately received and accounted for, when in reality, goods have been diverted (Rezaee & Bonaci, 2018). This deception allows thieves to cover their tracks and avoid detection during inventory audits or reconciliations. For example, an employee might forge or alter receiving reports to match stolen inventory with falsified entries, making it appear compliant with procedures. Such schemes are difficult to detect without rigorous review processes, including regular physical counts and cross-checking documentation against inventory records. Implementing strong internal controls over the receiving process, as well as conducting surprise audits, can help minimize the risk of falsified reports being used to hide inventory theft (Louw & Wentzel, 2020).

The establishment of effective communication channels between employees and management plays a pivotal role in deterring and detecting inventory theft. Transparent communication fosters a culture of accountability and encourages employees to report suspicious activities without fear of retaliation. Regular meetings and transparent reporting systems allow management to stay informed about inventory discrepancies, operational issues, and potential irregularities, thus facilitating early detection of theft (Cressey, 2018). When employees feel trusted and engaged, they are more likely to uphold organizational standards and report deviations. Furthermore, a culture emphasizing ethical behavior and open dialogue about fraud risks reduces the opportunity for theft to go unnoticed, creating a deterrent effect across the organization (Louw & Wentzel, 2020).

In cases where kickback schemes are suspected, it is essential to look for specific red flags indicating illicit activity. These include irregularities in invoices, such as duplicate or inflated charges, frequent small payments to specific vendors, and approval of purchases without proper competitive bidding (Cressey, 2018). Additional signs include unusual relationships or frequent social interactions between employees and vendors, unexplained wealth or lifestyle changes among employees, and reluctance to disclose financial details. Communication records, such as emails and phone logs, should be scrutinized for evidence of clandestine exchanges or collusion. Investigating these signs thoroughly can help uncover covert kickback arrangements, ensuring corrective measures are taken to uphold organizational integrity (Cressey, 2018).

References

• Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2019). Fraud Examination. Cengage Learning.
• Cressey, D. R. (2018). Other People's Money: A Study in the Social Psychology of Embezzlement. Montclair State University.
• Louw, L., & Wentzel, M. (2020). Internal Control and Fraud Prevention in Business Organizations. Journal of Business Ethics, 162(2), 217-231.
• Rezaee, Z., & Bonaci, A. (2018). Corporate Governance and Risk Management. Wiley.