is tentatively charged to the store. When the acknowledgement of receipt from the store is received, it is compared against the store’s records, the charge for the gift certificates is confirmed, and then the acknowledgement is filed away. Once a month, corporate accounting receive sales audit information from the stores and attempts to reconcile, but typically have no better luck than the store level audit clerks.Analysis of ProblemIt is very evident that there needs to be a drastic change in the J.C. Penney gift certificate tracking procedure from corporate accounting all the way down to the sales floor. Lax security and control, poor procedures, and inadequate testing of the hardware and software involved has created a very unstable situation with potentially large ramifications. Without quick remedy, potential financial losses could be staggering. In looking at this project, it is important to prioritize the underlying problems that are creating the unstable environment. The areas that need to be addressed are point of sale, sales audit, and corporate accounting respectively.First, and perhaps the most important, is to look at your sales floor and gain control of your gift certificates. These items are the same as cash and should be treated as such. Gain immediate control of your POS to track sales and establish accountability. Modify your POS, Sales Audit, and Corporate Accounting Procedures to implement tightly coordinated controls over the sale, sales audit, and accounting functions. Second, the inadequacies in the hardware and software need to be addressed. Can minor changes in the configuration of the hardware or minor changes in your software code eliminate potential methods of shrinkage? If not, can there be changes made to the gift certificate design to help eliminate shrinkage? Maybe it would take a combination of both. A definite audit trail of every transaction is a necessity. Give yourself the abili...
