Business Intelligence

The second weakness is management override; management can overrule prescribed policies or procedures for illegitimate purposes, such as personal gain or enhanced presentation of an entity's financial condition. For the example from the case is Woody plan to pay off his gambling debts with stealing the inventory from the employer and sell in out to the customer. Woody hired to work as sales representative he sold tires to more than 80 customer in his sales region that stretched by Goodner. Woody selling out the stealing inventory to the customer based on his company name and he make additional cost and he received the cash payment directly from the customer. When the customer complained with the additional cost he just simply apologized and corrected their account balance. Woody stealing and selling the employer inventory for him own benefit the employer.Next weakness is company didn't distribute the employee to different department such as accounting department, management department and storekeeper. For the example from the case is Goodner Huntington facility's bookkeeper, the unit's sales manager and two sales representative had unrestricted access to the accounting system. Since the large volume of sales and purchase transaction often swamped the bookkeeper, sales representative frequently entered transaction directly into the system. This sale reps routinely accessed, reviewed, and updated their customer's accounts. Any sales and purchases of inventory are required to key in by the accounting and the inventory in and out must control by a storekeeper or management accountant. It is because of sales manager or sales representative can easily selling the inventory to customer because the accountant are professional body they have to follow the section of MIA.

Next weakness is human error or mistakes, an entity's internal control is only as effective as the personnel who implement and perform the control. Breakdown in internal control can occur because of human failures such as simple errors or mistakes. The potential for human error due to carelessness, distraction, mistakes of judgment and the misunderstanding of instructions. For example of the case is Garcia was unaware that a disproportionate number of the complaints had been filed against Woody. When Garcia received a customer complaint, he simply passed it on to the appropriate sales rep and allowed that individual to deal with the matter. He maintained a file of the customer complaints only because he had been told to do so by the previous sales manager whom he had replaced three years earlier. The human error had been made by Garcia because he ignore the customer complaint this is actually can be control by sales manager if he awake of the complaint from customer.