The Popkin Umbrella Manufacturing Company maintains an inventory of miscellaneous supplies (e.g., pen, pencils, paper, floppy disks, and envelopes) for its clerical workers. The company stores these supplies on shelves at the back of the office facility, easily accessible to all company employees.
The company's accountant, Alan Most, is concerned about the poor internal control over the company's office supplies. He estimates that the monthly loss due to theft of supplies by company employees averages about $350. To reduce this monthly loss, Alan recommends a separate room to store these supplies and that a company employee be given full-time responsibility for supervising the issuance of the supplies to those employees with a properly approved requisition. By implementing these controls, Alan believes this change might reduce the loss of supplies from employee misappropriation to practically zero.
Question 1. If you were the company manager responsible for either accepting or rejecting Alan Most's control recommendations, what would your decision be? Explain.
Question 2. Identify some additional control procedures that the company might implement to reduce the monthly loss from theft of office supplies by employees.