Personal Experience with Inventory (Essay Sample)

Discussion 6
Name
Institutional Affiliation
Personal Experience with Inventory
Inventory fraud is the stealing of physical inventory items and altering the inventory records on a company’s financial statement. Inventory fraud may either be on the side of the employer or the employee. In the case of the employer, fraud is committed with an intention of falsifying records to portray a picture of a prospering business. In the case of the employee, fraud is most frequently committed once the intention of ‘ripping off’ a company for personal gain has been established. Therefore, fraudulent behaviour among the employees might as well as be an employer’s worst nightmare due to the potential losses that he or she might incur due to falsified inventory records. Without proper inspection and management of inventory records, employees with fraudulent behaviour will have an easy time ‘ripping off’ the business. The end result is the looming possibility that the business files for bankruptcy.
A very common case of inventory fraud occurs when there is inventory theft. This is when an employee tampers with the inventory records with personal gain as the main motive. It frequently occurs through theft of physical inventory items. This follows an alteration in the inventory so as to cover any tracks leading to the employee who stole the items. This kind of inventory fraud is most common in small business where the inventory is handled by one or two people and there is physical counting of the inventory items.
A possible solution to this problem is a change from one person handling the inventory to involving more people in handling the inventory. This will aid in reducing the possibility of inventory fraud since more people will be involved in recording transactions, and hence it becomes more difficult for them to co-ordinate and ‘rip off’ the business. This will involve separation of inventory-related duties which may include making bank deposits, placing orders, entering cash receipts into the accounts among other activities. The duties should be divided such that at every step of transaction, there is no one person handling all the activities, as in the case of making bank deposits and at the same time entering cash receipts into the accounts.
Response 1
In the first case of the bar manager who frequently took home bottles of liquor and blamed the co-bartenders, a perfect example of inventory theft is portra...