You have recently taken a position with Albers,Inc. a wholesale company that rel
ID: 2452537 • Letter: Y
Question
You have recently taken a position with Albers,Inc. a wholesale company that relies heavily on sales outside the United States.In order to facilitate sales worldwide,the company has ware-houses at several non-US locations from which it services important markets indifferent parts of the world.
You are in the midst of year-end closings,and your supervisor approaches you about what could be done to improve the apprearance of the company's performance for the current year.His idea to intentionally overstate year-end inventory at locations outsaide the United States,thereby reducing cost of goods sold and improving gross profit and net income.Because of the remote location where much of the inventory is housed,he reasons that it is unlikely that the overstatement be discovered.
You are aware that his compensation includes a bonus based,in part,on report of income.He has also indicatd that he will ''take care of you ''in the future if you are supportive taking steps to improve the company's reported financial performance,such as the inventory over-statement he currently proposes.
Explanation / Answer
Answer:a) Tools for fraudulent inventory overstatement:
1.Overstating the value of inventory components
2.Overcounting inventory items
3.Overallocating Overhead
The implications that are going along with your supervisor's plan are:
1.The first person to be seek by another auditor & be blamed
2.Bad reputation => affect the future of the company
3.No Black & White Agreement
4.Deceived & Manipulated
If you are inclined to cooperate, how will you deal with this situation?
1. Respectably reject his idea
2. Seek for a consultant
3. improve marketing stratergies
4. compare gross profit margin and net sales
Answer:b) Improve product and encourage bargain and improve marketing stratergies as well as compare gross profit margin and net sales.
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