Core Concepts of Accounting Information Systems 12th Edition by Carolyn Strand Norman, Mark Simkin

Exercise 18

Rogers, North, & Housour, LLC is a large, regional CPA firm. There are 74 employees at their Glen Allen, SC office. The administrative assistant at this office approached Mr. Rogers, one of the partners, to express her concerns about the inventory of miscellaneous supplies (e.g., pens, pencils, paper, floppy disks, and envelopes) that this office maintains for its clerical workers. The firm stores these supplies on shelves at the back of the office facility, easily accessible to all company employees. The administrative assistant, Sandra Collins, is concerned about the poor internal control over these office supplies. She estimates that the firm loses about $350 per month because of theft of supplies by company employees. To reduce this monthly loss, Sandra recommends a separate room to store these supplies and that a company employee be given full-time responsibility for supervising the issuance of the supplies to those employees with a properly approved requisition. By implementing these controls, Sandra believes this change might reduce the loss of supplies from employee misappropriation to practically zero.
a. If you were Mr. Rogers, would you accept or reject Sandra's control recommendations? Explain why or why not.
b. Identify additional control procedures that the firm might implement to reduce the monthly loss from theft of office supplies.