consider the following two situations situation 1 many employees of a firm that manufactures small tools pocket some of the tools for their personal use/

Situation 2: A manufacturing firm’s controller created a fake subsidiary. He then ordered goods from the firm’s suppliers, told them to ship the goods to a warehouse he rented, and approved the vendor invoices for payment when they arrived. The controller later sold the diverted inventory items, and the proceeds were deposited to the controller’s personal bank account. Auditors suspected something was wrong when they could not find any entries regarding this fake subsidiary office in the property, plant, and equipment ledgers or a title or lease for the office in the real-estate records of the firm