Use SSC at one of the local supermarket and

1) Document internal controls you observed during the checkout process

2) Identify any weakness in the internal controls. Identify accounts and
assertions at risks
3) For each risks identified in (2), recommend improvement to internal control to
reduce the risks
Supervision of the SSC
With supermarket shoppers having various degree of tech savviness and the SSC
having issues from time to time; some form of human intervention is still required.
The introduction of the SSC as a replacement of a station cashier allows the
supermarket staff to roam around the SSC counters to serve customers and
troubleshooting problems. Observed issues that the roaming supermarket staff
helped to resolve for the shoppers are: keying in of individual items that SSC is
unable to process such as handwritten reduction of items that are near shelf life,
assisting less tech savvy shoppers in processing payments from cards payment and
our team observations determined to some degree the prevention of theft/proper
scanning of items as the staff is seen from time to time to observe if the shoppers
had input all the items that are in the their baskets. The type of internal control in
this case is detective, corrective and preventive.
The internal controls observed during the checkout is the supervisory role of the
staff towards the self- checkout counter.
Weakness in internal controls. Identify accounts and assertions at risks
Despite best efforts to make SSC technology foolproof, some weakness in internal
controls can be clearly identified:
1. Theft the do-it-yourself selling point of the SSC is also appealing to
thieves. It is seen from the teams observation in using the SSC machine on
how some items can be seen to be scanned but not reflected in the system
by covering the barcode while looking as if one is serious in scanning the
items. Other ways of theft could be not scanning every items and just go
straight to placing them into the shopping bags provided.
Account and assertions at risk

COGS completeness If writing off towards COGS is being used for

Inventory existence
NTUC, then the completeness of recording the
COGS activity will be affected as items that
were stolen remain unknown until the next
stock stake
Inventory recognized in interim period/during
time where stock take is not carried out on a
regular basis will be at a lower figure.
Existence will be affected in this case as the
balance sheet would be having a higher figure
 Recommendation
1. A. random spot checks by employees to shoppers to improve on theft -
improving the internal control by introducing uncertainty. Best is to post
warning signs about the consequences of thievery and that random spot
checks will occur. This recommendation will help to improve the detective;
preventive; corrective capability of the current internal control

2. Collusion and overriding of items by staff members such as voiding of items

without second person authorization the staff member in charge of the SSC
counters have a considerable degree of autonomy in deciding which items to
be voided or changed. This could present an opportunity for the staff to
collude with the shopper to carry out fraudulent activities. Accounts and
assertions are risks are inventory and cash with the accompanied assertions
of completeness, accuracy, existence, valuation
Account and assertions at risk

COGS completeness If writing off towards COGS is being used for

Inventory existence
NTUC, then the completeness of recording the
COGS activity will be affected as items that
were stolen remain unknown until the next
stock stake
Inventory recognized in interim period/during
time where stock take is not carried out on a
regular basis will be at a lower figure.
Existence will be affected in this case as the
balance sheet would be having a higher figure

Recommendation
b. Rotation of staff to serve at the SCC counters and having at least 2 staff to
present. In order to override a certain items/void, 2 person have to sign off. This will
help to reduce collusion
c. training policies
d. background checks on employees background checks like credit cards report;
jail time ..etc. is important to flag out at risk employees. By taking on proactive
approaches to check on the background of employees, potential pressures which is
a building block of fraud as per the fraud triangle can be identified early. Therefore
the background checks on employees will strengthen the prevention and detection
portion.

3. SSC inability to scan items correctly like handwritten items will pose a
problem of displaying incorrect information.
Account and assertions at risk
Revenue Occurrence;
accuracy
Cash Occurrence; accuracy
2.
Revenue account will be at risk if business
transaction of selling the items had occurred
but not recorded at the correct amount or not
at all.
Completeness will be a concern if items are not
being scanned unintentionally, resulting in the
account not fully accounted for
Accuracy will be an issue as the machine may
accept wrong prices if prices are to be keyed in
manually by the staff or customers
Assuming the customers any medium of
payment will result in cash directly (i.e no
account receivables). Cash account will also be
at risk as it will be under-stated.
Completeness will be a concern if items are not
being scanned unintentionally, resulting in the
account not fully accounted for and cash not
received for items not scanned
Accuracy will be an issue as the machine may
accept wrong prices if prices are to be keyed in
manually by the staff or customers resulting in
lower than expected amount to be received for
that particular transaction