Question

What internal control procedure(s) would provide protection against the following threats?

a.Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.

need answer in depth!

Answer 1

Theft of Goods by the Shipping Dock Workers is an Employee level Fraud & it can be controlled by establishing the following Internal Control Procedure:

• No. of goods arrived during the shipment has to be noted by an employee other than workers before unloading by the Dock workers.
• Observation persoonel should be set up to observe the unloading process
• The Goods after unloading in the Godown or warehouse has to be counted & reconciled with the goods arrived units
• The Dock workers should be checked at the time of entry & exit from the Dock through a metal detectator.

This Procedure will ensure safety of goods from theft from dock workers.