At the end of every
quarter we did a formal stock count. When we were a real startup, we were
always able to reconcile the stock and find it. As we grew, there were some
discrepancies but nothing major. The differences were so small that we simply
wrote them off.
Last quarter, the first
stock count showed that more than 15% of the stock was missing. We counted
again and found the same thing. We looked all over the warehouse and couldn’t
find it. We now had six people working in the warehouse but they all said they didn’t
know where the stock was.
We examined all the
invoices and delivery notes and found that they hadn’t been reconciled for over
a year. The accountants used the invoices to create the accounts and value the
stock. The delivery notes were in piles in the warehouse office. Upon closer
investigation it emerged there were no delivery notes for a number of high
value items. We called the supplier and they said they were delivered. They
provided signed notes to show when they were delivered. All were signed by the
same warehouse operator.
When we asked him, he said
he didn’t know anything about missing stock. There was nothing else we could do
as there was no hard evidence of fraud. We tightened our controls and
reconciled all the paper work. All was fine at the next stock count. To this
day we don’t know what happened.