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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 three-part 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,

Recommendation

Picking tickets must be pre-numbered 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

Recommendation

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