Several concerns were discovered while senior internal auditor, Chris Domain, reviewed the accounting records of the West End Boutiques company founded by Libbie Williams

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Several concerns were discovered while senior internal auditor, Chris Domain, reviewed the

accounting records of the West End Boutiques company founded by Libbie Williams. Those

concerns were:

 

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Physical inventory counts varied from inventory book amounts by more than 6% at two

of the stores. In both cases, physical inventory was lower.

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Two of the stores seem to have an unusually high amount of sales returns for cash.

?

In 9 of the stores, gross profit has dropped significantly from the same time last year.

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At 4 of the stores, bank deposit slips did not match cash receipts.

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One of the stores had an unusual number of bounced checks. It appeared that the same

employee was responsible for approving each of the bounced checks.

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In 7 of the stores, the amount of petty cash on hand did not correspond to the amount in

the petty cash account.

 

Requirements:

 

1)For each of these concerns, identify a risk that may have created the problem.

2)Recommend an internal control procedure to prevent the problem in the future.