Does the parts pad agree with the general ledger?
Dealerships should reconcile the parts pad with the general ledger on a monthly basis. Failing to reconcile these opens a door to employee fraud. The parts manager, for example, could sell parts and pocket the cash without suspicion or adjust numbers on the pad to boost department performance measures. One parts manager issued a falsified customer credit return to his own credit card. To account for the $5,000 of parts that were never actually returned, he provided adjusting journal entries to the accounting department to adjust the inventory level on the general ledger, which were never questioned by the accounting department. The discrepancy between the parts pad and the general ledger should have raised questions. • Who signs the dealership’s checks? The employee or employees charged with signing checks should not also be responsible for posting journal entries or reconciling the bank’s and dealership’s records, and they should not have easy access to checks. Although many dealers a
