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Asset Misappropriation: Inventory and Other Assets - Coggle Diagram
Asset Misappropriation: Inventory and Other Assets
Types of Inventory Theft Schemes
Larceny schemes
Most noncash larceny schemes are committed by employees with access to inventory or supplies
Purchasing and receiving schemes
Dishonest employees can also manipulate a company’s purchasing and receiving functions to facilitate the theft of inventory and other assets
Prevention of Inventory Schemes
Separation of duties
Independent checks
Proper documentation
Physical safeguards
Methods for Concealing Inventory Shrinkage
Fictitious sales and accounts receivable
Write-off inventory
Altered inventory records
Physical padding
Inventory Shrinkage
Inventory shrinkage is the unaccounted-for reduction in the company’s inventory that results from error or theft
Detection of Inventory Schemes
Someone has been embezzling money through a false billing scheme
Someone has been skimming sales revenue
Ending inventory has been depleted by theft