Ethical Decision: Inventory theft When some people think about inventory theft,

Question

Ethical Decision: Inventory theft When some people think about inventory theft, they imagine a shoplifter running out of a store with goods stuffed inside a jacket or bag. But that's not what the managers thought at the Famous Footwear store on Chicago's Madison Street. No, they suspected their own employees were the main cause of their unusually high inventory theft. One scam involved dishonest cashiers who would let their friends take a pair of Sketchers without paying for them. To make it look like the shoes had been bought, cashiers would ring up a sale, but instead of charging $50 for shoes, they would charge only $2 for a bottle of shoe polish. That's when the company's managers decided to put its register-monitoring system to work. In just two years, the company cut its Madison Street inventory losses in half. Here's how a newspaper described the store's improvements: Retailers Crack Down on Employee Theft SouthCoast Today, Chicago By Calmetta Coleman, Wall Street Journal Staff Writer Famous Footwear installed a chain-wide register-monitoring system to sniff our suspicious transactions such as unusually large numbers of refunds or voids, or repeated sales of cheap goods. Before an employee can issue a cash refund, a second worker must be present to see the customer and inspect the merchandise. The chain has set up a toll-free hotline for employees to use to report suspicions about co-workers Required: 1. 2. To which of the three types of employee fraud does this article relate? Explain how the register-monitoring system would allow Famous Footwear's new cash employee theft. What is the name of the control principle that is addressed by Famous Footwear's new cash refund procedure? Think of and describe at least four different parties that are harmed by the type of inventory theft described in this case 3. 4.

Explanation / Answer

1. This article relares to asset misappropriation as a type of employee fraud by the employees as employees who have been given the respnsibility to manage the assets are helping steal them.

2. The register monitoring system would allow any sale to be monitored in terms of inventory movement. It is a maker checker concept which has been introduced in the store.

3. The name of the control principle that is addressed by Famous Footwear's new cash refund procedure is called buddy system.

4. The four parties affected by the inventory theft are: management, co-workers, customers and vendors.

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