Physical controls: The Levis family should have taken the initiative of enacting periodic counting and comparison on the amounts that were on cash, layaways, inventory records and sales.
Segregation of duties: Betty had access to all the business’ cash receipts and was also tasked with recording all the sales. This meant that she was in a very good position to conceal any embezzlement that she might have executed. As a result, she should not have been responsible for all these duties. The Levis ought to have embraced an active role by initiating segregation of duties as opposed to putting excessive trust on one individual.
Authorization of transactions: Betty should have been receiving authorization from the management of transactions such as layaways. This would make the management aware of all the in-process and current transactions.
Physical safeguards: The Levis should have contemplated of having locks, security cameras and physical barriers to ensure that they protect the property, which would have protected Betty from stealing.
The responsibilities that the CPA would have had in this case were dependent on the role he was undertaking in the business. If he was only offering tax services, he did not have a responsibility to pursue the matter. However, he should have reported any shortcomings that he might have encountered. In this case, the CPA should have reported the cash receipts records that he did not think made sense for such a small business.
In case the CPA was also offering auditing and other accounting services to the business, he had a responsibility of pursuing the matter. Given that he had noticed the shortages in cash receipts records, he would have had the obligation to gather more evidence to ascertain whether there were aspects of fraud taking place.
Having an inventory safe: This ensures that the products available in the store cannot be accessed by anyone hence minimizing prospects of theft.
Single person accessing the cash register: This control measure will ensure that there is the concept of accountability among the employees. It becomes easier to trace any shortcomings.
Segregation of duties: It should be clear what every employee ought to be doing, and no one should be given control of more than one activity to help counter prospects of covering fraud.
Physical controls: The management should check the cash register after every business day to help ascertain the cash receipts to prevent misappropriation.
Safeguards: This should come in form of locks, physical barriers, and cameras to help protect the property within the premises from any loss.
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