In a store such as an electronics store, a cashier and a customer may conspire to steal items in the following manner:

• Customer brings many items to the cashier
• Cashier scans only a few items
• Customer pays for scanned items and leaves

store with all items
• Later, cashier and customer sell stolen items for personal gain

As an auditor, you are assigned to investigate this situation. In your report to your supervisor, include what type of application controls are violated. How is this fraudulent act detected, and how can it be prevented?

What will be an ideal response?

Application Controls violation:
The sales application control objective is violated.
• Error in process customer order
• Error is items delivery
• Error process account receivable
• Error in process funds (record customer order).

Detection:
• Verify customer's receipt with the items in customer chart. (This is done in stores like Wal-Mart and Sam's Club.)

Prevention:
Monitoring Cameras could prevent cashier to commit this type of fraud.