Reference no: EM132605069

Question - It is now July 2020, and Mr Alex Richardson has been very successful in growing the business of Cycling Deal. The business now operates at 2 markets in the region and employs 3 employees (Mr Richardson and 1 employee sell bicycles at the local market each week, and 2 employees are assigned to sell bicycles at the Sherwood markets)

He has come to you for your advice, as he appears to be having problems with the inventory and/or cash receipts. He has been keeping track of inventory using the two worksheets. He likes how it keeps track of inventory on hand, and he tells you how much he loves not having to count inventory each and every week after the markets to see what inventory is left.

When he completed the stock take on 30 June 2020, the closing balance of inventory in each worksheet didn't match with the actual number of small and large bicycles on hand. The worksheets showed that the closing inventory was 68 small bicycles and 56 large bicycles. The stock take showed that the business actually had 52 small bicycles and 40 large bicycles.

You review their inventory worksheets, and there are no errors in their worksheets. So, it appears that cash taking and/or some bicycle have been stolen. You also review the two cash receipt books (one used at each of the two markets), and the amount of cash taking banked for the year was $300 less than the taking as per the cash receipt books.

Mr Richardson is unsure what has happened.

Required -

i) Explain three possible ways that employees could have stolen cash and/or bicycles form the business without Mr Richardson.

ii) Discuss three controls/procedures that Mr Richardson should implement in his business to help prevent employee theft.