Internal control
This query is : Resolved
CA Kushal Soni
(Querist)
26 June 2012
A company having more than 50 gold and silver jewellery stores, it encountered one fraud case by store manager.
Store manager sold jewellery of Rs. 2,00,000 in cash, when gold price was Rs. 28500, customer didn't asked for an invoice and he bought jewellery in cash payment (at that time provisions of TCS on jewellery were not there). Store manager keeps the cash with him and did not record sale transaction in the store computer system (as customer did not asked for invoice) and in the evening (same day) gold prices were fallen down substantially and after this store manager record the sale transaction in store computer system (at reduced current gold prices) and the difference of cash due to reduction in gold prices was misappropriated by store manager.
Please suggest some strong internal controls which could be effectively deployed in order to control this malpractice. (Ignore implication of TCS on cash sale of jewellery). Kindly suggest.
Store manager sold jewellery of Rs. 2,00,000 in cash, when gold price was Rs. 28500, customer didn't asked for an invoice and he bought jewellery in cash payment (at that time provisions of TCS on jewellery were not there). Store manager keeps the cash with him and did not record sale transaction in the store computer system (as customer did not asked for invoice) and in the evening (same day) gold prices were fallen down substantially and after this store manager record the sale transaction in store computer system (at reduced current gold prices) and the difference of cash due to reduction in gold prices was misappropriated by store manager.
Please suggest some strong internal controls which could be effectively deployed in order to control this malpractice. (Ignore implication of TCS on cash sale of jewellery). Kindly suggest.
26 June 2012
You should instruct all stores that they should apply rates published in a particular newspaper (Ex.Hindu) without any changes. If you see the record the rate should be as published in the newspaper. End of the day Central office should monitor the invoices raised below or above the applicable rates and ask clarification to that particular store for not applying specified rates.
All accounts should be frozen by EOD.
All accounts should be frozen by EOD.
Message likes :
1 times
26 June 2012
Consider electronic lock tags for each item in the store. For sale, the e-lock has to be disengaged using the software & the scanner attached to the computer - this records the Times of the Sale. Hence one has to account the cash @ the relevant time of the sale.
Doesn't your company use an ERP?
Doesn't your company use an ERP?
Message likes :
1 times
CA Kushal Soni
(Querist)
26 June 2012
Thanks to Ravi Sir and Kishore Sir for the right helping reponse.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Capital Gail Exemption Certificate
- Taxation of crypto futures in India Fy 2026- 2027
- EPF ECR NEW RULES Sep 17th 2026
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- Issuing of delivery challan by seller of goods
- MSME disclosure and disallowance
- Accounting treatment of AMC alongwith the purchase of Laptop
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
