- Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
- Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
- Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
- As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
Ariana Levinson says
Q4 As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
I’m sure many of you have had this scenario happen to you: You’re at the store buying clothes or what have you. You pay at the register, all is well, and you go to walk out of the store…..and the alarm goes off as you walk through those thingies (look like little posts) that are in the exit. They’re quite unobtrusive, meant to detect when someone tries to walk out of the store without paying. The barcodes on the tags are typically deactivated at the register to prevent this alarm going off but sometimes it doesn’t work and so you have to do the walk of shame out of the door while waving your receipt so people know you aren’t a bad, shoplifting person.
Similarly, there are those tags in expensive clothes that only the store can remove. If you try to remove them yourself, either the clothes will have a giant hole in them, or they will get covered in ink. Either way, they’re ruined so there’s no point in trying to shoplift them.
Kevin Berg says
Based on the question, your example seems to be an obvious one. At least as a former Marshalls worker these things are on most items and everybody more or less is aware but yes it is annoying. I was guilty of removing those tags at the cashier station. We are just as ashamed as the consumer.
One of the less obvious controls are the undercover workers that pretend to shop who have the ability to detain people for a reasonable amount of time until cops show up to take over.
Thes measures prove to be ineffective to me because the year that I worked there we had 2 ‘pretend’ shoppers and during that time there was only 1 arrest. You are spending a dime to save a penny.
Michelangelo C. Collura says
One amusing flaw in this control (we all know this one) is that the tags sometimes fail as you said, and the employees, not wishing to make the effort, will simply assume the alarm is false and wave the customer through. It’s probably a false alarm, but someone aware of this flaw can use it against the firm. Alarm goes off? Must be false. Pay no attention to the many layers of clothing I didn’t have when I entered!
Andres Galarza says
I’ll add that sometimes it seems like employees are not really in a position to act on the alarm, either. I’ve noticed times where staffing at a place like Sears or something is so low that an employee at the register have so many other customers waiting in line that they can’t go check on the alarms.
Lezlie Jiles says
Hi Ariana,
I absolutely agree with your comment about the walk of shame. To add to the not so obvious list I would say those stickers that they put on the inside or on the bottom of the product that is not seen so easily. The stickers a supposed to be deactivated at the register as well, but often times its not. And, thus goes the walk of shame.
Mengting Li says
Your example reminds me what I have experienced. I bought clothes in a store which is very far from where I live. The seller forgot to take the detect thing out, and the alarm didn’t even ring a second. I found it out when I already home. Now I can’t wear it because I can’t remove it by myself.
Candace Nelson says
The door sensor at one of the busier store locations of a retail chain that I used to work for didn’t work on one side. It had something to do with the configuration of the mall and it was unable to be resolved. I always say that hope is not a strategy, but management used to “hope” that shoplifters would not learn about this logistical flaw and use it to their advantage. In this instance, the tags were a perceived control, which in some instances is enough to deter fraud.
Kevin Berg says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Obviously the worker could not afford the car but desired one so he had incentive to do the theft. He looked around the assembly plant and realized that the opportunity was there. He rationalized it by saying just one piece won’t be missed and that since he was there for several years he could justify his actions.
– The environment was favorable to fraud because there were no security checkpoints leaving the plant to detect or catch the thief whether by searching oversized bags or checking cars at the gate
– There was little oversight for the workers if they could so easily collude to taking parts. Where was the boss everyday?
-No cycle counts to detect a pattern of missing parts from stock. Did they just shrug it off and write do a negative adjustment out of inventory and absorb the cost?
Khawlah Abdulaziz Alswailem says
Good points, Kevin. As you mentioned that there was the opportunity to commit fraud due to the lack of oversight. Cash said he was able to take part in his big lunchbox which might be easily unnoticed. However, Cash sang, “the big stuff we snuck out in my buddy’s mobile home”. If there are no monitoring of products such as the engine or trunk, then many employees would have had the opportunity to steal.
Michelangelo C. Collura says
Great points, especially about the boss. I believe there was a complete disconnect between foremen and workers, much less management and the warehouse staff. This means that the theft is only the tip of the iceberg, in my mind. Management may not even know what’s happening on the floor, their production numbers are almost certainly wrong or fudged, and therefore the factory can’t go to corporate with ANY meaningful numbers. How such a business model was successful for so long is beyond me, but there it is.
M. Sarush Faruqi says
Kevin,
Great points. In addition to what everyone else said, it seems like there was no communication from management to employees about the seriousnesses of taking company materials home for personal use. There was a lack of policies to enforce this rule and a lack of monitoring to make sure the rules were being followed. This is why it was so easy for Johnny Cash to take what ever he needed. The company was losing out in all this and did not even know.
Lezlie Jiles says
Hi, Kevin
Great point. “No cycle counts to detect a pattern of missing parts from stock. Did they just shrug it off and write do a negative adjustment out of inventory and absorb the cost.”
I asked myself a similar question. How did they account for the inventory during that time? Was there no inventory check? What if several employees did the exact same thing? They would have no supply to complete their product. I also believe they should have used some type of personal item check system or prohibiting personal vehicles past an identified point.
Jing Jiang says
Good point, Kevin. As you said, the personal needs may be one of the incentives for a worker to steal. And poor internal control provides the opportunity for the worker to steal easier. One of the common thoughts that cause people to do the wrong thing is they underestimating the consequence. As you said, “just one piece” will not be the things.
Jing Jiang says
But adding all parts together, the value would be high. It could result in big consequence.
Mengting Li says
Great point. Because of the environment was favorite of fraud, it raises the stealing opportunity. Therefore, security checkpoints are very necessary for the organization like that. Small things are easy to steal and take and hard to find out it was stolen.
Matthew J. Dampf says
“No cycle counts to detect a pattern of missing parts from stock”
This is exactly what I was thinking as well for the same reason you stated.
It would also be odd for an employee to have access to the entire inventory in an assembly line environment instead of just the few parts you’re working with.
Parneet Toor says
Ariana, good example of shoplifting in addition to bar-codes on the tags; employees of the stores must be educated about loss prevention and in- store inventory control .Every store have installed security cameras and time-clocks for tracking purposes so, that employees can be tracked and get time stamps for inventory control. Employee theft is far less likely if inventory systems are well-run and organized.
Parneet Toor says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
The environment was favorable to fraud in ‘One Piece at a Time’ Video scenario because there were no controls to check theft or inventory in the assembly line. Based on Fraud Triangle:
Perceived opportunity (I can do it / conceal it and not get caught) was present for workers to steal parts of the car from the asemblyline. Internal controls were missing like
• No cameras were installed at work area to track employees/workers.
• No time-clock to keep track of workers and no security to check bags or sensors on parts.
• Lack of oversight over inventory.
• No order management and sign off by manager/supervisor after parts been assigned to worker.
• No Request or approval process exist for workers.
Kevin Berg says
This song was written a long time ago so I doubt surveillance cameras were readily available and/or affordable. I do not know the history of security cameras and how far they go back. Punch clocks have been around but you had to manually scour all the employee records and could not just run a report to query a database. If theft isn’t too big of a deal then a little here and there will just be written off. As I said in another post, Companies do not like to spend a dime to save a penny. If write off from theft becomes a problem then more investment in security measures will have to be made. So if a company has $20,000,000 in revenue and only write off $2000 a year in theft then they will carry on and not blink an eye.
However if the revenue is $20,000,000 and the write off from theft is $100,000, it might seem feasible to add a enhanced security measures. Based off of GM sales, the components that were taken for 1 car were probably such a minuscule amount.
Khawlah Abdulaziz Alswailem says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
The Fraud triangle is a model for explaining the factors that result in one committing occupational fraud. It consists of 3 components – Pressure, Opportunity, and Rationalization.
From the song, we can clearly see the Fraud Triangle. Johnny Cash wanted the car and knew he couldn’t afford it, so he used his position within GM as an opportunity to steal from the company to obtain the product. In this instance, the environment was favorable for Fraud. He worked for GM on the assembly line and like most companies they believe their employees would have integrity and therefore be a trusted employee. He didn’t raise any suspicions throughout the years, the measure he took by stealing parts over the year would not be easily picked up by management or others.
Johnny’s opportunity to commit fraud was very high as the working environment didn’t have proper policy and controls to monitor the inventory. It’s extremely vulnerable for employees to steal company’s asset without being caught. In Mr. Cash’s case, he has been stolen parts in years, but nobody noticed because he took one piece at a time.
Candace Nelson says
It is interesting that you referenced the one piece at a time aspect of this (fictitious?) fraud, Kahwlah. It brought to mind statistics I have heard over the years regarding the average duration of frauds. As I often do, I referenced the Association of Certified Fraud Examiners (ACFE) bi-annual Reports to the Nation dating back to 2006 and confirmed my recollection that the average fraud lasts 18 months, and that more financial harm is caused the longer frauds remain undetected. In this instance, the fact that parts were taken over a long period could explain why even weak inventory controls could have failed to detect a pattern of abuse.
Another point worth mentioning is that the parts were not all for the same model, so even if there was minor inventory shrinkage it would not have been obvious that is related to an employee who was building an automobile from scratch using company parts!
http://www.acfe.com/rttn2016.aspx
Khawlah Abdulaziz Alswailem says
4. As consumers, we encounter (knowingly and unknowingly) inventory controls all the time (e.g., locked jewelry cases). What are 1-2 less obvious inventory control measures used? Are these measures effective?
The first inventory control measure that comes to mind is controlling the quantity of inventory on-site at any given time. This includes Keeping track of the stock that is already in the warehouse and knowing what products are being stocked and how much of a particular item is available. Having too little of inventory could lead to an organization running out before they can get more. This not only reduces the amount an organization can produce or sell but also may lead to customers going elsewhere if they do not want to wait for restocking. On the flipside, having too much inventory not only creates more costs for an organization but also increases the potential for theft. By tracking and maintaining proper levels of inventory, an organization can reduce these risks.
The second less obvious inventory control measure is a segregation of duties. Theft by collusion becomes harder to commit when more people are getting involved in a multi-step process. We need to avoid allowing the same person to place inventory orders and check the accuracy of incoming shipments.
https://www.camcode.com/asset-tags/expert-tips-on-inventory-control-methods/
M. Sarush Faruqi says
Khawlah,
Great points. To me, it seems maintaining the proper levels on inventory in a warehouse is one of the biggest challenges for companies within any industry. If the order is not a sufficient quantity, then there will not be a sufficient supply within the warehouse and customer orders may not be fulfilled. This will result in a loss to the company. If there is an overstock of a particular item, then the company will need to incur costs of keeping the item in the warehouse. As you said, it’s important to have a tracking system of how much inventory is present at a particular time.
Jing Jiang says
Good points, Khawlah. I agree that physical counting regularly and SoD are less obvious inventory control measures. They are used widely in inventory control now. I think an optimized inventory management system is also important. For example encryption on the inventory tracking software, the system can effectively track and find the inventory that you need, the system should be updated and tested regularly and etc.
Kevin Berg says
2 .Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
I would control exit and entry into the facility restricting personal things that can conceal parts. That way the worker goes to the floor in just their safety gear. Any packs for carrying things can be used on the floor and not taken off the floor. At the employee entrance would be a guard. Trying to smuggle something out in your clothes would have to be really small so large items would look suspicious under your clothes.
Installation of surveillance cameras – obviously if people are potentially watching you then it will deter thieves.
Do random cycle counting – knowing an item can be randomly counted could deter an employee from stealing if they know there was a camera on the item with retrievable video from the past.
Mengting Li says
I agree with you. Installation of surveillance cameras not only can protect workers safe but also it can make workers more behavior. It is a good way to reduce the chance of stealing. Some workers are really good at stealing things without any notice. Therefore, do random cycle counting and put a guard at the entrance are also the good moves to reduce the chance of stealing.
Matthew J. Dampf says
Surveillance cameras are something I completely agree with, but I’m not so sure about the guard. It seems like a more expensive solution, especially when you consider that the building is likely to have multiple entry/exit points. There’s also the possibility of the guard being in on the theft, especially if s/he isn’t paid well. The guard certainly helps, but I’m not sure how much, or if it’s cost effective.
Matthew J. Dampf says
Surveillance cameras are something I completely agree with, but I’m not so sure about the guard. It seems like a more expensive solution, especially when you consider that the building is likely to have multiple entry/exit points. There’s also the possibility of the guard being in on the theft, especially if s/he isn’t paid well. The guard certainly helps, but I’m not sure how much, or if it’s cost effective.
– I apologize if this shows up twice. It appeared to have posted, but I don’t see it. My other comments appeared immediately.
Candace Nelson says
I like the idea of the cycle counts, as the perception of a control is a control in and of itself.
Another deterrent to employee fraud is checking retail employees bags before they leave their store after their shift. In Johnny’s example, if there was a chance that someone was going to periodically inspect his lunch box he may have been less likely to devise this scheme!
Parneet Toor says
Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
Being operations manager responsible for the assembly line I would implement key controls like:
1. Inventory control: Segregation of duties between the count and recording of the counted parts in the hand and authorizations for the same. To ensure the completeness of the inventory of assembly parts, inventories created should also be closed after closing. The account
To check the effectiveness of the control, I would routinely spot-check transactions, records and reconcile to ensure expectations are met.
Control activities are tools, including policies, procedures, actions and other mechanisms that help ensure actions are taken to address risks.
In case where duties cannot be effectively separated, management can substitute increased review or supervision as an alternative control activity to help reduce the risks. In an environment with a very limited number of employees, management needs to be involved in reviewing and approving transactions, reports, and reconciliations.
Binju Gaire says
Parneet, you have made great points regarding the implementation of controls. I believe the reconciliation of inventory records is the most effective control in operations. Performing reconciliation in a routinely manner can ensure proper controls in the inventory. Further, I agree with the Segregation of duties as an effective control because it addresses the risk component and helps to mitigate them.
Yijiang Li says
I agree with your point which is segregation of duties within a inventory control. Some supervisor should be assigned to track the amount of auto parts in assembly lines twice a day. Second, as you said, relevant control activities including policies, procedures, actions and other mechanisms are also important, becuase they can mitigate the risk before the actual fraud happens. Both active and passive measures should be conducted together for a maximum effect.
Parneet Toor says
Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
All the Countries have their own political and legal systems. The key is to understand that once you are in a foreign market you must abide by the import/export regulations of that country not your home country. So I would say first control is to adhere to regulations of the country that going to do business with. Another is Foreign Exchange Control is a method of state intervention in the imports and exports of the country, so that the adverse balance of payments may be corrected”. Here the government restricts the free play of inflow and outflow of capital and the exchange rate of currencies.
Michelangelo C. Collura says
Very good point about the free flow of capital, Parneet. This is a political tactic used by countries, and firms are largely at the mercy of it.They must therefore either communicate with the government to attempt to avoid this, or they must account for it in the allocation of capital, for example in banks within the country.
Yijiang Li says
As you said, understanding of regulations in a foreign market is especially critical. Therefore, adhering to regulations would be a quite effective method to mitigate the risk during a OTC process in a foreign market. However, for a purely domestic company, they just have to handle their marketing through a single regulation and policy. An International company must adapt to different business environment.
Kevin Berg says
3. Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
I’m not sure how different controls would be in terms of easing but some things do change for a domestic company vs. international.
– Currency wise, you really would only have to worry how your economy is doing.
– Import and export regulations wouldn’t be a problem meaning no customs duties to worry about.
– Shipping costs would be very affordable
– Logistics and material movement would be very efficient if ROP’s for items are sufficient and there isn’t much ‘surge’ in demand
Having said those 4 things I look at logistics and material movement as one that stands out. Knowing there is no red tape keeping your inventory from being depleted for weeks at a time would mean a higher turnover of inventory meaning more purchases, invoices, transactions and paperwork which could lead to ‘holes’ that somebody could take advantage of and commit fraud.
Michelangelo C. Collura says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Well, Johnny Cash is great, although that story about burning a national forest was concerning. Anyway, based on the triangle, he clearly had opportunity – one side of the triangle. It’s one thing to steal pieces in the lunchbox, but to steal huge components requiring a mobile home, we can assume that GM had absolutely no meaningful security. In that era, they would have had security guards and possibly fencing in given areas with components, but this was either absent or inadequate.For Cash, the other two sides – incentive and rationalization – were very easy indeed, and of course GM didn’t help things by convincing him over the years that his theft meant nothing to the company’s bottom line. He apparently concluded – correctly, it seems – that they wouldn’t miss the many stolen parts, and since he really wanted the Cadillac – even a bizarrely random chunk of different Cadillacs – he considered the risk to be acceptable.
Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
Since this happened prior to 1970, as ops manager, I would implement detective inventory controls at the end of each shift. A line worker would need to document the number of, for example, steering wheels he processed during his shift. This would then be cross-referenced with the number received by the department installing the steering wheels the following shift/day. This would hopefully identify theft unless collusion is happening. A second very simple preventive control would be security guards posted in areas with the highest turnover, such as line workers. This would hopefully identify theft attempts before success.
Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
Different currencies would need to be used and accepted by customers, with exchange possible online from one to another. This means a likely automated process for determining accurate exchange rates, which could change on a daily basis. Another example would be restrictions placed on allowed purchases, with some countries not allowing the purchase of certain products. If a firm is found to sell illegal products to a given market, they risk losing market access if the government shuts them out.
As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
One amusing inventory control measure I heard of was used in some warehouses. Security personnel would occasionally hide behind one-way mirrors built into the walls to identify theft attempts. The mirrors appeared to be cosmetic, lost in an ocean of many other mirrors on the walls or ceiling.
Another example would be Just in Time, or JIT. This method is very effective in food sales, as it ensures that no facility is flooded with products that can spoil during a power outage, natural disaster, etc. Most of us can see how effective it is after a blizzard; we snatch up produce at the store along with everyone else the day after the storm, and we need not worry that it’s been sitting for days going bad. However, JIT may be ineffective in manufacturing, as seen in some supply problems encountered by automakers after the 2011 Japanese earthquake.
Lezlie Jiles says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Johnny Cash’s song titled “One Peace at a Time” is the perfect example of why controls are needed. I also believe it speaks to the importance of an organization needing to implement several types of controls to reduce/eliminate inventory theft. This scenario also brings to mind that he couldn’t have been the only employee stealing the inventory if it was that easy.
The “One Piece at a Time” video was favorable to fraud, because:
• Perceived opportunity (I can do it / conceal it and not get caught)
During his first year there his job was installing wheels (tires) and he creates a plan to steal the nuts and bolts in his lunch box. This indicates that there were no automated or manual controls used in this environment at all. I understand that this was 1953, so I would not expect automated controls to apply, so manual controls would have been their best option. There could have been the use of an inventory audit during certain time periods, or the use of surprise audits would have made Johnny think twice about his actions. Also, having security overseeing bag checks, and implementing a policy of personal car usage in the dock would have also prevented this theft. The lack of manual controls led Johnny to believe he could indeed conceal the parts for his car and get away with it.
• Incentive or Pressure (Financial or emotional force pushing to commit fraud)
In my opinion, Johnny Cash’s actions were both financial and emotional. He worked at GM for several years and the one thing he loved the most he couldn’t afford. He knew GM’s process and he believed that Gm was making so much money that they wouldn’t miss one little “car part” that would total an entire car (one day). Johnny stated something about “[getting caught meant getting fired, but he figured he would have it all before he retired]”.
• Rationalization (Personal justification for dishonest actions)
Again, Johnny worked at Gm for several years and in reviewing this song I believe he wasn’t getting paid much. He knew the company was profitable and in his mind, it was a few parts here and there over time, so he justified his dishonesty because he believes it wasn’t all at once so it couldn’t be too bad. I think he believed having a car that was worth “at least $100k” was a great retirement bonus for all the years he worked there.
I further think that using SoD would have worked well in this scenario. If employees were segregated to wheels (tires), nuts, and bolts they couldn’t gain access to the steering wheels and the engine sections and vice versa. GM could have avoided this issue by implementing manual controls such as inventory checks, personal items checks, stock control (only have the part count needed for an expected number of cars created in a given week)
M. Sarush Faruqi says
Lezlie,
Great points. I completely agree with you on the notion that segregation of duties is very important in this case. Johnny Cash was able to get access to anything he wanted because he was ‘a part of the process’ in every step within the assembly line. I realize this was in the 50’s but if the assembly line was designed where the access to certain parts was not clearly accessible, it could’ve prevented Johnny from being able to grab what he wanted.
Khawlah Abdulaziz Alswailem says
I completely agree with you, Lezlie.
When a company segregates the duties of employees, it minimizes the probability of an employee being able to steal assets and cover up the theft. For example, an employee could not steal inventory from a company and have the theft go undetected unless someone else changes the inventory records to cover the shortage. To change the records, the employee stealing the inventory must also maintain the inventory records or be in collusion with the employee who maintains the inventory records.
Jing Jiang says
Good point that SoD could effectively reduce the possibility of the theft described in “One Piece at a Time” happened. And if there are security camera and strict exit and entrance checking or checkpoint, the theft could be prevented as well.
Lezlie Jiles says
2. Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
In this scenario, if I were the operations manager the preventative control that I would implement would definitely be SoD. Whereas, segregation between supplies order, supply received, and supply usage would all be completed by different employees. I would further segregate the supplies usage to different employees as well, and prohibit usage and entrance to certain sections of the plant. My detective controls would be to implement a quality control to be conducted on the physical inventory. As well as, personal items checks, and prohibiting personal vehicles past an identified point.
Andres Galarza says
Q1: Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
I’d say the lyrics speak most to the Opportunity and Rationalization parts of the triangle. In the song, Cash says that he’s always wanted a “long and black” Cadillac. He knows that he’s got a better chance of not getting caught if he takes the materials to build a car “one piece at a time.” Cash goes on to say that GM (the car’s manufacturer), “won’t miss just one little piece. Especially if I strung it out over several years”.
He also mentioned having the support of some of his coworkers. The environment was favorable to fraud in the song because GM didn’t strictly monitor inventory and employee behavior. The fraud took place over several years.
Andres Galarza says
Q2: Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
Inventory parts on a daily basis
Install security cameras along production line and loading/unloading areas
The above controls would give the manager the ability to account for his or her inventory on a regular basis and the ability to see if employees were removing inventory during the assembly process.
Matthew J. Dampf says
“Inventory parts on a daily basis”
It’s been awhile since I worked in a position where I did inventory checks, but I remember this being very expensive – multiple hours of literally every employee at that location. It was something we did only once or twice per year. I’m not sure how feasible this would be, as the control would be more expensive to implement than the risk we’re trying to mitigate.
Andres Galarza says
Q3: Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
I remember from my previous role that certain destinations would require stuff like spraying wood pallets with pesticides (something you wouldn’t have to do domestically). Also the documentation required for international exports is much more involved and burdensome.
Andres Galarza says
Q4: As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
I’m sure we’ve all dealt with embedded sensors setting off the alarms near entrances/exits at stores. My favorites are those that are stuck into the inside of books (sometimes obscuring the written content).
Binju Gaire says
Andres, I agree with you. The embedded sensors are are common in almost all the stores and we all are familiar with it. I find this a very effective inventory control. I was not aware of the ones that are stuck into the inside of books. Thank you for sharing.
Yijiang Li says
Although many student consider surveillance cameras is a efficient method for inventory control, I would say embedded sensors may play a greater role than surveillance system. Regular cameras may encounter a visual blind spot when they are working within a big assembly line plant. However, the embedded sensors are only put in entrance and exit and then they will play the role of supervision of the whole working place.
M. Sarush Faruqi says
2. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
The ‘One Piece at a Time’ video demonstrates the need to strong inventory controls to reduce the risk of theft.
Incentive/Pressure:
Johnny Cash worked at the assembly line for years and was a part of building something that somebody would eventually own. He knew he could not afford to buy one himself with amount of income he was making. With the lack of controls in place, it was obvious that he could get away with making his own car by taking parts from the plant he worked in. The environment at the plant was such that only the people with money could afford to buy cars during that time period.
Opportunity:
The environment and lack of controls at the plant was a clear opportunity for Johnny Cash to commit the crime. Since there were no security cameras in place or no inventory counts, Johnny knew he could get away with putting various parts into his lunch box everyday. From watching the video, it seemed as if there was no way to track the inventory at any given time. The lack of policies within the plant made it quite easy for Johnny Cash to take whatever was needed without anyone noticing. There was also a lack of Segregation of Duties so there wasn’t anybody who was monitoring what was coming and going from the plant.
Rationalization:
In the video, Johnny Cash made reference to the fact that GM would not care if he takes a parts from the plant as they could afford to do so being a huge car manufacturer. Since he was taking parts and building the car himself, Johnny convinced himself that it was acceptable since he wasn’t technically stealing an entire car. Again, the environment at the plant was such that he could take what was needed and think he was not committing any crime.
To me, the environment was designed in such a way that there was not any accountability for anything or any process within the plant. As a result, Johnny Cash could get away with things we would consider a crime today.
Yijiang Li says
Good explaination for each factors of the Fraud Triangle. In summary, there are external conditions and personal factors that could affect workers to conduct a theft. Therefore, for inventory control, we have to conduct not only physical limitation to restrict the behavior of workers, but also enhancing the education of policy and law.
Xiaomin Dong says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Pressure – This is what motivates Mr. Cash to commit the crime at the first place. His motivations to taking the parts of Cadillac piece by piece from the assembly line were his desire to drive around in style, drive everybody wild, have a one-of-a-kind and the only one in town.
Opportunity – Mr. Cash had the opportunity to commit a crime because he worked at the GM’s automobile assembly line for 20+ years and had access to all the parts he needed to build a Cadillac. He was able to take out most of the parts with his lunch box and if the parts were too big to carry within the lunch box, he had an accomplice with a motor home.
Rationalization – One thing clear in this mind was he had never considered himself as a thief. He was going to work for GM more than 20 years and he took out the parts piece by piece over several years. And he was the one that was building a car. In my opinion, that argued that he wasn’t stealing a car, but he was just getting a help from GM to build his own car.
Khawlah Abdulaziz Alswailem says
Good explanation, Xiaomin. As you mentioned there was an area of rationalization. Later in the song, Cash sings that “I never considered myself a thief, but GM wouldn’t miss just one little piece, especially if I strung it out over several years”. In this, Cash is rationalizing that his actions had no effect on GM or those around him.
Anonymous says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud?
Pressure: Mr. Cash is eager to have a long black car, but he don’t have enough money, which motivates him to consider committing an illegal act to realize his goals.
Opportunity: Mr. Cash gets the trust from his company. And GM corp don’t did well on its process monitoring, which give Mr. Cash an opportunity to solve his financial problem with a low perceived risk of getting caught.
Rationalization: The vast majority of fraudster are first-time offenders with no criminal past; they don’t view themselves as criminals. The fraudsters justify the crime to himself in a way that makes it an acceptable or justifiable act. So does Mr. Cash. Mr. Cash thought he is not a thief, as he thought what he did doesn’t have any harm on GM corp.
Source: http://www.acfe.com/fraud-triangle.aspx
Xiaomin Dong says
2. Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
If I were the operations manager responsible or the assembly line, I would implement two specific controls to prevent frauds
The first one is a Segregation of Access. In the ‘One Piece at a Time’ video, Mr. Cash basically had access to all the parts he needed to build a Cadillac. If he had a limited access to all the parts, GM could’ve prevented Mr. Cash from committing the crime. As an operations manager, I would create different groups in an assembly line and each group would have only limited access to the parts that they are only responsible for.
The second control I would like to establish is a ‘Matching system’. What I mean by the ‘Matching system’ is if there are 100 parts sent to an assembly line, in the end of each day or each process of the assembly, those 100 parts should be recounted or monitored. That was we can count what is missing or has been completed.
Xiaomin Dong says
3. Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
Shipping domestically is different in shipping internationally. Domestic companies can easier track its packages and contact to the third party shipping carrier like UPS, USPS or Fedex if making some changes based on the similar time zone, local policies and currency. International companies have more risks to lose their packages because different countries have different policies, time zone, currencies and languages, making shipments harder. This is the reason that many companies buy insurance on their goods for shipping internationally to cover the costs if goods are lost.
M. Sarush Faruqi says
Xiaomin,
Great points. Shipping domestically vs internationally is indeed different. In addition to what you stated, I want to add that the expense involved shipping domestically vs internationally is also different. Additional fees such as tariffs add up when shipping internationally. In addition, the current of rate of exchange also differs between countries so its important that both parties are aware of this rate when making a deal. Many countries require a Certificate of Origin when items are shipped from a foreign country. Many countries ban the shipment of certain products into their countries altogether so it’s important that the country doing the shipping is aware of these restrictions.
Binju Gaire says
Xiaomin, I agree with you. International shipping is difficult because of the barriers such as policies, time-zone and so on. I would like to emphasize on the polices aspect. Polices such as trade agreement can play a significant role in international shipping. Sound trade agreement between any countries can make international shipping easier, however, if the trade agreement is not good among the countries then there may be issues in international shipping.
Qiyu Chen says
Yes,I agree with you. The one different area in the international corporation is about the shipment Tracking. The shipment process may be lost the products or product damaged from overseas shipping. the control should provide visibility into the location of goods throughout the life of the trade. This includes entry and exit from ports, title exchange and proof of delivery. Tracking provides a status report regarding the arrival of goods at their final destination.
Xiaomin Dong says
4. As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
Obvious inventory controls include installing cameras or making property locked. For less obvious inventory control, the first way is using electronic data interchange and bar code scanning can help eliminate data entry errors. People count wrong numbers or are fraudulent because of intentionally or unintentional manual count. we can have two people to count a same bulk of inventories to reduce the risks.
Another way is using ABC method for inventory control. This is one of the common methods used across retail industry and it is at times coupled with other methods for better control on inventory. This is more of an inventory classification technique where in products are classified based on the sales contribution and importance of the same in their assortment plan.
Khawlah Abdulaziz Alswailem says
Well said, Xiaomin. As you mentioned, one of the inventory optimization best practices is categorizing the Inventory which is similar to the ABC analysis practice where management categorizes its inventory according to its value and speed of turnover. Sales numbers and profitability margins are some of the ways stocks are valued. Inventory optimization software, such as EazyStock, can help inventory managers track an item’s demand and lifecycle across 9 different demand patterns, from new to growing to decline, to ensure replenishment practices and customer demand are never out of step with each other.
Qiyu Chen says
I think one inventory control measure that comes to mind is controlling the quantity of inventory on-site at any given time. Having too little of inventory could lead to an organization running out before they can get more. This not only reduces the amount an organization can produce or sell, but also may lead to customers going elsewhere if they do not want to wait for restock. On the flipside, having too much inventory not only creates more costs for an organization, but also increases the potential for theft. By tracking and maintaining proper levels of inventory, an organization can reduce these risks.
Lezlie Jiles says
4. As consumers, we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used? Are these measures effective?
I believe the two items I would say were less obvious inventory control measures would be surveillance and secret security shoppers. Surveillance is used for control measures in just about everything we do in today’s public and private areas, and the equipment is being produced in undetectable versions. As consumers and citizens, we are recorded in just about everything we do. As for secret security shoppers, these are employees who are posing as a consumer that is shopping to keep an eye on the inventory and customers that they feel are a threat.
Binju Gaire says
Great points, Lezlie. I was not familiar with the secret security shoppers. This is a very unique inventory control measure. Also, this measure is effective in tracking down the issues related to inventories which are caused by customers in the store.
Candace Nelson says
Question 4: As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
In a retail organization that I used to work for, the two most significant fraud risks were theft by external customers and theft by employees. Here are two controls that were implemented to control both of these risks:
1. Loss Prevention Audits
The company maintained a Loss Prevention (LP) program whereby every store was potentially subjected to one or more surprise audits throughout the year. LP audit location and frequency was based on the store’s loss history and ratings of prior audits. LP audits consisted of questions ranging from controls over register functions, transmission of sales to corporate (“polling”), handling of cash and bank deposits, and the authorization of credit and return transactions, to whether background checks were performed when new employees were hired, propriety of maintenance of personally identifiable information, and the appropriateness of record retention.
The portion of these audits that addressed theft consisted of “quizzing” random employees about their knowledge of LP policies and procedures, determination of whether current signs were posted in the employee room about relevant LP topics, inquiry as to whether the employees knew what to do if they suspected customer theft (e.g. look for price tags hidden in dressing rooms, offers to hold customer bags while they shopped, and notifying mall security rather than chasing a perceived thief into the mall). I was especially surprised to learn that employee in the front of the store who greeted and offered to assist customers was actually a control designed to prevent theft. Since the perception of a control is a control, once a customer was acknowledged, it was less likely that they would steal goods – especially the new, higher priced items on display in the front of the store.
Improved LP audit scores over time clearly indicated that this control effectively reduced theft of goods. Training was provided to employees at stores with consistently low scores (on average, compared to other stores in the chain and the industry). Failure to improve could also resulted in termination of employment (usually at the store manager level).
2. Return Policy
The company originally had a liberal return policy that allowed customers to get their money back without proof of purchase (e.g. receipt). Hence, if a customer (including employees) stole goods and then returned them, they would receive money back for an item they had never purchased.
It was determined that this policy increased the likelihood of theft, so management changed the return policy to require a receipt for cash refunds, and if a customer did not have a receipt, they were given store credit. The theory behind this change was that the thief really wanted the cash – not the goods. Although store credit cold be redeemed for a lesser cash value, that took time and effort, and the purpose of this control was to deter the theft in the first place.
The measure of the success of this control was the fact that both theft and the volume of return transactions steadily decreased. Hence, it was determined that this control effectively reduced the incidence of theft.
Candace Nelson says
2. Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
Training
Management should be trained to look for the indicators of fraud, e.g. follow up on inventory shrinkage to determine the root cause. The fact that this fraud went on over a period of years indicates that management routinely ignored the disappearance of inventory, albeit in small quantities. In order to detect fraud, one has to think about the means by which fraud can be committed, and that can be accomplished via fraud awareness training.
Whistleblower Hotline
The fraud – as depicted – was committed by a number of employees who may have gone along with it because of peer pressure, e.g. the desire to fit in. However, it is feasible that one or more of those employees knew that what they were doing was wrong. If the company had a method for an honest employee to report the wrong doing without fear of reprisal, such as a whistleblower hotline, it is likely that this fraud would have been reported early on.
The results of the 2016 Global Fraud Study communicated via the Association of Certified Fraud Examiner’s (ACFE) Report to the Nations on Occupational Fraud and Abuse state that tips are once again the most common method whereby occupational frauds are originally detected (43.3% in 2016, 42.2% in 2014, and 39.1% in 2012). Incidentally, the increasing trend in tips as a means to detecting fraud is the reason I chose to recommend this course of action.
http://www.acfe.com/rttn2016/detection.aspx
Lezlie Jiles says
3. Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples
The shipping process for a domestic company seems straightforward. The order is placed, the stock is checked for the item, payment is secured, and it’s packaged, and then shipped. If the package is lost in transit it can be tracked, and in any event, refunds can be given. Simple, somewhat…
However, on the other hand, the OTC process as it relates to international shipping can be quite cumbersome. The two items I chose were embargo checks and import/export licenses. During the OTC process, an international company has to also compensate for making sure the receiver has a license to bring a particular item into the country. An embargo check is also required to ensure items being shipped don’t have a ban on them. These two controls (I believe) are identified during the customer order and shipment creation process.
Jing Jiang says
I agree that international shipping is more complex than purely domestic shipping since the embargo checks and import/export licenses are required. In addition, the international business needs to deal with different politics, governance, and legal systems, which increase the challenges for the controls over the business.
Mengting Li says
Great point, I do believe that international shipping is complicated. First, because of the time difference, sometimes it is hard to respond and process orders in time. Second, international shipping also needs to deal with different politics, governance, and legal system like Jing mentioned above. Third, international shipping is a long distance ship. So there is the high probability of loss due to the long distance and complicated processed.
Jing Jiang says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Incentive/ pressure: to satisfy the personal needs and under pressure of low personal income, a worker may want to theft auto parts from the assembly line.
Opportunity: lack of supervision on the assembly line, which increased the opportunity for theft.
Rationalization: just one piece at a time cannot obviously be found, and the compensation would be low even if being found.
The environment was favorable to fraud. Lacking oversight, a worker could easily theft from an assembly line, even by using a big “lunchbox” to transfer the auto parts. Additionally, with the friends’ help, he thought what he had done was not that wrong, since there were many other people support his plan. He was not alone.
Mengting Li says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
The Fraud triangle is a framework designed to explain the reasoning behind a worker’s decision to commit workplace fraud.
Opportunity: He worked on the assembly line which gave him the chance to be close to all the parts he wanted to have. Then, lack of surveillance gave him chances to take things home because he thought nobody will find out.
Incentive/Pressure: He hoped he can own a car but he was lack of money. Therefore, he generated the idea of stealing things.
Rationalization: Personal Justification. He stole it one piece at one time. He thought it just a small piece, it totally means nothing to GM.
The environment was favorite to fraud because there were no any controls there to prevent workers stole things from the assembly line.
Matthew J. Dampf says
4.) What are 1-2 less obvious inventory control measures used.
The first one I can think of is knowing lead times from suppliers in order to accurately provide shipping estimates to the consumer. Retailers that move huge volume with JIT inventory aren’t necessarily selling inventory that they have on hand. Supplier contracts with guaranteed lead times enable these retailers to provide accurate shipping estimates to consumers even under circumstances that would not be possible without these controls.
A second one is the use of multiple suppliers to ensure that problems with a single supplier doesn’t sink your entire sales process. Having multiple suppliers keeps the supply chain able to meet some extra challenges that a single supplier couldn’t meet by itself. It can come with a cost, due to doing lower volumes than with a single supplier, but is a worthwhile inventory control.
Are these measures effective?
These controls are generally effective from what I can see. Retailers generally meet their shipping estimates, which speaks to the efficacy of each of these controls.
Binju Gaire says
Answer to #4
In my previous work I worked as an auditor. One of the inventory control measures used in the work was putting property number tag on all the devices that were provided to the auditors. Auditors were given inventories like laptop, portable monitors, wireless mouse, hard drives and so on. Each devices were given a unique property number. Whenever auditors used the inventories they were required to checkin the devices by documenting the property tag number. The administration required the employees to fill out inventory check-list every six months to ensure that the inventories were not lost or stolen. Also, at the time of termination, the employees were asked to fill out the checkout form by documenting the property tag number of devices that they used for the work. I believe this measure is really effective because it helps to track the inventories easily, Reports of loss, theft or stolen inventories are rare with this control measure.
Binju Gaire says
Andres, I agree with you. The embedded sensors are are common in almost all the stores and we all are familiar with it. I find this a very effective inventory control. I was not aware of the ones that are stuck into the inside of books. Thank you for sharing.
Edward Gudusky says
Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
1. I would implement an inventory control which accurately tracked the number of parts used in any given day, week, month, and year. It doesn’t seem like parts were tracked.
2. I would also implement a control which lined up which parts are being used by which employee. This way if any parts are missing at the end of the week (or month) depending on when inventory is reconciled, the employee can be held accountable.
Edward Gudusky says
Controls are important in all the OTC processes including shipping. What would be different in the controls of a purely domestic company vs. an international company? Give 1 – 2 specific examples.
1. A purely domestic company does not have to deal with customs during shipping. There may be different custom regulations for different countries that may require different types of packaging. If inappropriate packaging is flagged at customs, the product may never reach the customer and will impact the cost and reputation of the company.
2. Shipping from coast to coast for a US domestic company, the business can pretty much specify how long ground shipping will take (5-7 day), 2-day express delivery will take or even overnight delivery. Internationally is harder to accurately state. There may be weather problems unidentifiable, work force related problems in the other country or even simpler, address related problems that aren’t easy to foresee due to different address standards in other countries.
Yijiang Li says
1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
According to fraud triangle structure, opportunity, incentive/pressure, and rationalization are three essential factors that make the environment favorable to fraud. Initially, opportunity is mostly relevant to specific external conditions, for instance, there is no enough supervisors or surveillance cameras within the assembly lines. Such an environment provides workers a wrong perception that they can conduct theft without being caught.
Incentive or pressure is always related to personal factors. For example, financial pressure from family could force some workers to steal auto parts from assembly line and sell it to earn money. Emotional pressure can also push people to do the same theft, but their purpose is just to show off they have an excellent vehicle.
Eventually, rationalization refers to both external conditions and personal factors. People have to find some reasons from external environment to justify their dishonest actions. In this scene, there are majority of reasons that could be excuses for workers to commit theft., such as our company is profitable, or our compensation is low.
Edward Gudusky says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
Pressure – In this video, the worker really wanted to have a car that would be the envy of others. Due to the fact that most workers could not afford these cars they were building, it made stealing parts to sell for extra income an easy option
Opportunity – Since this was from the 40s-60s there was likely very little monitoring of the workers, including no security cameras. If confronted, it could likely be a he said she said sort of thing.
Rationalism – the workers might think that the company wouldn’t even notice on the bottom line if they were to take a small number of parts.
Edward Gudusky says
As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases). What are 1-2 less obvious inventory control measures used. Are these measures effective?
1. One that may or may not be obvious to some is for some items, only a few units (or maybe only 1 unit in some cases) are actually put on the shelf at any given time. This makes it easier to identify whether or not an item is sold or missing. If a salesperson notices that item is not on the shelf and they didn’t sell one, they may suspect theft.
2. Since a lot of others here have been talking about theft inventory controls, I’ll talk about something different. Stores keep track as best as possible on how many customers come into the store. Some stores have motion sensors on the doors to detect the number of customers walking through the door and some have counters on the doors that track how many times the door is opened. The company can use these numbers for marketing purposes. They can use metrics to know whether their current inventory is drawing in more customers that previous month’s inventory or vice versa. There are many other key metrics that can be determined based on number of customers (number of items purchased per customer average, dollars spent per person average, etc…)
Anonymous says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud?
Pressure: Mr. Cash is eager to have a long black car, but he don’t have enough money, which motivates him to consider committing an illegal act to realize his goals.
Opportunity: Mr. Cash gets the trust from his company. And GM corp don’t did well on its process monitoring, which give Mr. Cash an opportunity to solve his financial problem with a low perceived risk of getting caught.
Rationalization: The vast majority of fraudster are first-time offenders with no criminal past; they don’t view themselves as criminals. The fraudsters justify the crime to himself in a way that makes it an acceptable or justifiable act. So does Mr. Cash. Mr. Cash thought he is not a thief, as he thought what he did doesn’t have any harm on GM corp.
Source: http://www.acfe.com/fraud-triangle.aspx
Qiyu Chen says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud?
Pressure: Mr. Cash is eager to have a long black car, but he don’t have enough money, which motivates him to consider committing an illegal act to realize his goals.
Opportunity: Mr. Cash gets the trust from his company. And GM corp don’t did well on its process monitoring, which give Mr. Cash an opportunity to solve his financial problem with a low perceived risk of getting caught.
Rationalization: The vast majority of fraudster are first-time offenders with no criminal past; they don’t view themselves as criminals. The fraudsters justify the crime to himself in a way that makes it an acceptable or justifiable act. So does Mr. Cash. Mr. Cash thought he is not a thief, as he thought what he did doesn’t have any harm on GM corp.
Source: http://www.acfe.com/fraud-triangle.aspx
Qiyu Chen says
Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud?
Pressure: Mr. Cash is eager to have a long black car, but he don’t have enough money, which motivates him to consider committing an illegal act to realize his goals.
Opportunity: Mr. Cash gets the trust from his company. And GM corp don’t did well on its process monitoring, which give Mr. Cash an opportunity to solve his financial problem with a low perceived risk of getting caught.
Rationalization: The vast majority of fraudster are first-time offenders with no criminal past; they don’t view themselves as criminals. The fraudsters justify the crime to himself in a way that makes it an acceptable or justifiable act. So does Mr. Cash. Mr. Cash thought he is not a thief, as he thought what he did doesn’t have any harm on GM corp.
Source: http://www.acfe.com/fraud-triangle.aspx
Qiyu Chen says
Assume the ‘One Piece at a Time’ video scenario could happen. If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement? Explain how the control addresses the risk.
In the video, we get that Mr. Cash can get any auto parts without any authrization, and after he steal it, and no body in the asseble line aware the missing parts. Firstly I will implement preventive controls: when the employees get auto and trunk parts needs to get the approval from the inventory managers. The segregation of duties is necessary for monitoring the inventory