Corporation B is Distribution Company which engaged in furniture and home appliance business. Their business process is selling furniture products to dealer which is traditional retail store and modern market supermarket. Top management of Corp. B set a policy that for sales, the provide credit sales with term of payment of 30 days with 3% of sales discount when customer paid on time. The director also gives policy that customer able to pay their payable using cash, transfer to corporation bank account, check, even post-dated check. The reason is to make it easy for customers to pay. The company opens wide opportunities for customers to pay by various payment methods or media. The other issue is that in Corporation B, selling and account receivable collection were handled by salesman, no collection department. A process like this continues to run, until someday, a case arises when a salesman run away with/steals cash receipts from customers. The stolen amount of money is quite large; it counted as several times of that salesman monthly salary. To make it even worse, this fraud was discovered after 2 weeks from the day of the incident, because the receivable account recording employee rarely confirms to the customer

a. According to above case, explain your analysis regarding internal control weakness in Corporation B!

b. Provide your recommendation to the future selling activity of Corporation B!

Public Answer

UODSP2 The First Answerer