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Hold On To Your Goods – Preventing & Detecting Inventory Fraud

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Before starting this self study program, please go through the instructional document.

Overview

  • How Inventory Fraud Is Committed
    2 mins
  • Understanding Shoplifting
    14 mins
  • Tools for Preventing Different Schemes
    26 mins
  • Inventory fraud In Acquisition
    37 mins
  • Inventory Overstatement - Laribee Wire Manufacturing Corp
    61 mins
  • Miscellaneous Inventory Frauds
    76 mins

Course Description

Inventory is one of the biggest assets on a manufacturer’s balance sheet. It’s also one of the hardest assets to measure and track. Thousands of transactions flow through the inventory account each year — and many of these journal entries require subjective estimates, such as overhead allocations, write-offs and valuation adjustments. In addition, many employees have direct daily access to inventory or inventory accounting records, providing an ongoing temptation to steal or cook the books. The retail industry estimates shoplifting losses at roughly $50 billion per year.  Meanwhile, the ACFE estimates that 8% of occupational fraud involves the purchasing or warehousing and custody of inventory.  With a total of $4.5 trillion, or 5% of GDP lost to occupational fraud, this is an additional $360 billion for a total of over $400 billion lost to inventory related fraud each year.

Inventory fraud can occur during the acquisition, storage, manufacture, or sale of inventory. Unanticipated inventory shortages due to theft, overpayment for inventory due to collusion with a supplier, and over-ordering inventory due to a conflict of interest can have a devastating effect on a business and may be the difference between success and failure. The examples mentioned above are only a few of the many schemes related to inventory fraud.  It is incumbent on management to protect inventory and to make certain that goods conforming to the entity’s needs are acquired at reasonable prices and are used as intended to avoid a competitive disadvantage.

This CPE webinar will explore the ways inventory fraud may be committed and both common controls intended to prevent them as well as unconventional controls that may prove more effective when it comes to fraud prevention.  In addition, we will also discuss information from which expectations can be derived to develop analytical procedures and management reports useful for detection.

Cases involving inventory losses will be used to highlight various schemes and controls.

Learning Objectives

  • To identify the various ways inventory fraud is committed
  • To identify the individuals within an entity having the greatest opportunities to commit inventory fraud
  • To identify the characteristics and red flags that may indicate the possibility of a fraud scheme being committed
  • To identify the types of controls typically used to prevent or detect inventory fraud and the characteristics of those that are most likely to be effective
  • To recall reports that will provide indications of whether inventory fraud is occurring in an entity

Who Should Attend?

  • Accountant
  • Accounting Firm
  • Accounting Managers
  • Accounting Practice Owners
  • Accounts Director
  • Auditors
  • Bookkeeper
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • Senior Accountant
  • Staff of Accounting Firm
  • Tax Accountant (Industry)
  • VP Accounts