After Catching a Thief: Internal Controls in a Small Business
After completing this assignment, students will be able to:
1. Describe basic internal inventory control procedures
2. Comprehend why small, family-owned businesses may not have inventory control systems that allow them to monitor employee actions
3. Debate the benefits and drawbacks of monitoring employees from a legal, cultural, and cost/benefit perspective
This incident is appropriate for use in organizational behavior, human resource management, family business, small business, managerial accounting, business law, and operations management courses. Major issues in the incident are internal controls, fraud prevention, culture, and employee monitoring policies. Course discussions will want to clearly analyze the implications that both the absence and creation of internal controls have on fraud prevention, company culture, and daily operations. Class discussion should also examine the ethics and legality of employee monitoring policies. An epilogue near the end of the teaching note explains Karl’s subsequent actions to track inventory and avoid fraud.