ACC 4230Spring 2023Internal Control ProjectThe purpose of this project is to develop a better...

Question

ACC 4230Spring 2023Internal Control ProjectThe purpose of this project is to develop a better understanding of internal control through considering a scenario based on an actual case of misappropriation of assets.  Answer all of the requirements below based on the following facts of the case.  Be sure to properly cite any sources you use in completing the requirements.      Surprising Returns at All-American Grocery MarketsBill Smith worked as a clerk at the customer service counter of an All-American Grocery Markets (AAGM) store in subuan Chicago, Illinois.  AAGM is a major chain of grocery stores with over 2,500 locations across the US and has been a publicly-held company for 75 years.  In November 2021, Bill was working long hours processing returns of goods from AAGM customers.  However, in addition to actual customer return transactions, Bill was also crediting a number of fictitious transactions to several of his own credit cards.  In a two-week period during that month, Bill processed 50 phony transactions which totaled $890,000, and spent a significant amount of the stolen funds on luxury purchases including several expensive new vehicles.  When the fraud was finally discovered by AAGM in early January 2022, store personnel blamed the occuence of this fraud on a key reviewer of return transactions being off-work due to an illness during those two weeks of November XXXXXXXXXXDuring its fiscal year ended December 31, 2021, AAGM’s total sales revenue and net income were $129,400 million and $2,550 million, respectively.    Required: 1) How would a retail grocery store like AAGM differ from other types of companies (e.g., manufacturers, wholesalers, etc.) in handling sales returns?2) Would the fraud described above indicate a material weakness in ICFR for AAGM?  Why or why not?3) Assume that AAGM wants to implement a new system for handling in-store customer returns and that you are a consultant who has been engaged by the audit committee of AAGM to do so.  In a ief memo addressed to the chair of AAGM’s audit committee, describe the internal control policies and procedures that AAGM should put in place to help ensure that this type of fraud does not happen again.Note: Your work for all of the requirements above should be contained in one, double-spaced MS Word document which you will upload to Pilot’s Dropbox.  This project is due by 5:00 pm on Thursday, April 20. Your work will be graded based on the quality of your content, as well as the clarity and form of your writing.  Be sure to use proper grammar and spelling.  The word count for the entire assignment should be approximately 1,200 words.  Failure to submit the project when due will result in substantial point reductions as a penalty for late submission.  Also, the case submitted must be each student’s own work, collaboration among students in completing this case is not permitted.

Ankita · Accepted Answer

Name:
Professor:
Course:
Date:
Title: Fraud in All-American Grocery Market
Contents
Introduction	1
Differences in handling sales return in retail grocery and others	1
Material Weakness IN ICFR	2
Internal Control policies and procedures to be adopted	3
Conclusion	5
References	5
 
                                                              Introduction
All American Grocery markets (AAGM) a public held company is a chain of grocery store with over 2500 stores across US. It was during the year 2021 when its clerk Bill Smith was alleged of making fraudulent transactions. He was working long hours to process the sales return from the customers, during this course he credited number of fictitious transactions to his own credit card from which he earned $8,90,000 which he spends in his luxurious lifestyle. In 2002 when this fraud was noticed it was found that the fraud occurred when the key reviewer of the sales return was absent due to illness during those two weeks.
Difference in handling sale return in retail grocery store and other entities
A return happens when the customer brings back the purchased item to the store in exchange of a similar item, refund or credit in the store. Handling sales return is an important part of doing business but businesses often neglect this. When the return is hassle free, easy and right it improves customer loyalty and helps in retention of revenue. Handling the sales return differs with the type of organization for e.g., the process to handle sales return is different in retail store and in other organization like manufacturing, wholesaler etc. Here we will be highlighting some of such differences: -
· In the retail sale the customer directly brings back the purchased goods to the store asking for the credit or refund or similar product whereas in the other types of sale there is a “quality inspection” of the product and often the product is sent to audit department to ascertain if the return is genuine or not and when the quality inspection department is satisfied that the products are not as per the quality demanded from the customer this sales return is accepted.
· In the retail sales return the time period of return is less and hand to hand either the change, credit or refund is done for the customer standing at the store.
· The process of retail sales return is easy than compared to the return in other types of sales be it manufacturing, wholesale or any other.

It has to be 1,200 words, I have attached assignment requirement.

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment