What is the outcome of not implementing sufficient controls over inventory?

Not implementing sufficient controls over inventory leads to increased losses through theft and breakage, making this the correct answer. When a business does not have strong inventory controls, it becomes vulnerable to various risks. These include unauthorized access to inventory, inadequate tracking of stock levels, and lack of accountability for items received and shipped.

Consequently, losses from theft become more likely, as items can be taken without detection. Additionally, inventory that is damaged or lost due to poor handling and absence of controls is more difficult to track, leading to further financial losses. This negatively impacts the overall profitability of the business and can also complicate financial reporting, as companies may struggle to accurately value their inventory on hand.

In contrast, the other options suggest outcomes that do not correlate with the lack of inventory controls. Higher gross profit margins would indicate better management and efficiency rather than the deficiencies in controls. Reduced efficiency in processing sales orders may arise from various operational issues, but it is not a direct consequence of weak inventory control alone, as it could stem from staffing or technological problems. Improved auditing outcomes typically result from enhanced controls that facilitate accuracy and transparency, making it unlikely that insufficient controls would lead to better audit results.