Rae Philippe was a warehouse manager for Atkins Oilfield Supply, a business that

Question

Rae Philippe was a warehouse manager for Atkins Oilfield Supply, a business that operated across eight Western states. She was an old pro and had known most of the other warehouse managers for many years. Around December each year, auditors would come to do a physical count of the inventory at each warehouse. Recently, Rae’s brother started his own drilling company and persuaded Rae to “loan” him 80 joints of 5-inch drill pipe to use for his first well. He promised to have it back to Rae by December, but the well encountered problems and the pipe was still in the ground. Rae knew the auditors were on the way, so she called her friend Andy, who ran an-other Atkins warehouse. “Send me over 80 joints of 5-inch pipe tomorrow, and I’ll get back to you ASAP”, said Rae. When the auditors came, all the pepe on the books was accounted for, and they filed a “no-exception” report. Requirements 1. Is there anything the company or the auditors could do in the future to detect this kind of fraudulent practice? 2. How would this kind of action affect the financial performance of the company?

Explanation / Answer

In the Present case

Rae Phillips was warehouse manager for Atkins oilfield supply

Question – 1

Question – 2

This was affect the company financial position in the aspects of Inventory cost and Manafacturing cost, Because here actually the 80 joints of 5-inch drill pipe was not used by the Atkins oilfiled but shown as inventory part, It affect to increase the manufacturing cost.

In Financial statements showing the incorrect inventory this will leads the misleading of inventory.

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