Virginia Samuels, the purchasing officer of Handyman Wholesalers Pty Ltd (Handyman), has a relative who owns a retail hardware store.Virginia arranged for hardware to be delivered by manufacturers to the retail store on a COD basis, thereby enabling her relative to buy at 'wholesale prices in Handyman's name.Virginia was probably able to accomplish this because of Handyman's poor internal control for:
A)sales returns.
B)cash receipts.
C)perpetual inventory records.
D)purchase orders.

Question

Quizplus · Accepted Answer

Virginia was able to accomplish this by exploiting weaknesses in Handyman's internal control over purchase orders. By arranging for hardware to be delivered directly to her relative's store on a COD basis, she bypassed the controls that would normally ensure purchases are for the company's benefit, not for personal gain.

Virginia Samuels, the Purchasing Officer of Handyman Wholesalers Pty Ltd