Saks Fifth Avenue Case Study

1204 words 5 pages

Case Study 3.3: Saks Fifth Avenue
Liberty University
13 September, 2009
The Saks Fifth Avenue case study concentrates on the human aspects of internal controls. Of note are Saks’ zero-tolerance policy of employee theft, anti-harassment policy and complaint procedure. Also, the case study highlights control activities in a major retail store. Finally, it questions what an auditor’s role is concerning employee’s work environment.
Question #1 In your opinion, was Saks’ zero-tolerance policy for employee theft reasonable? Was the policy likely cost-effective? Defend your answers. The case presented only one instance when Fierro was caught stealing. Employee theft is
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Limited authorization powers are entrusted to key personnel, and can include a two person concept to document such departures. This is also another segregation of duties Third party counting of cash: At the end of a shift, the employee turns in his or her change drawer to another department for counting. That department has the list of transactions associated with that cash drawer, and compares the cash, checks, coupons, and credit card receipts to the list of transactions listed. Any deviations can alert management to either incorrect entry procedures, or employee theft. This is also a segregation of duties. Notice a theme? Inventory: Periodic inventory of goods allows comparison of physical goods to what records say there should be on the shelves. It is better to have an independent person, whether a private company or someone from another department. However, use of same department’s personnel is acceptable as long as the personnel rotate inventorying different sections. The independent inventory provides a segregation of duties. Video surveillance: Video surveillance can provide both detection and preventative measures to prevent both shoplifting and employee theft. The objective is to catch the crime in


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