Patrick Chen is an entrepreneur who owns several businesses. His most recent acquisition several months ago was the Imperial Hotel, located in a resort community about 300 kilometres from Patrick's residence. Because he is not usually at the hotel, Patrick hired a manager, Kevin Kildare, to run the hotel's operations. Patrick's daughter Vanessa is now studying accounting at university and asked her father if she could work at the hotel during the summer. He agreed and asked her to observe the operations at the hotel and report back to him at the end of her first week of work.

Vanessa Chen's first job was at the front desk working with Megan Kildare, who is Kevin's daughter. One evening Kevin's friends dropped by the hotel to use one of the rooms for a poker party. Vanessa noticed the following day when reviewing room cleaning reports, that even though the room was cleaned by hotel staff, there was no record of a cash or credit card receipt for the use of the room that night that appeared on the daily room sales report.

A couple of days later, Vanessa spent some time in the hotel lounge where Michael Kildare, Kevin's son, was the only bartender on duty during a very busy shift in the early evening. At that time, the lounge had a drink special with tequila on sale. Michael was very busy and sometimes was unable to ring drink sales into the cash register. Vanessa also noticed that he was using tequila bottles from a box under the bar instead of the ones that were on display over the bar. The following morning when the lounge manager, who works only during the day, performed the daily count of inventory, he concluded that tequila sales were not as high as he had hoped they would be given the fact that the tequila inventory had barely fallen over the past 24 hours.

Later that day, Vanessa reviewed a report showing that parking garage receipts had decreased during the past month. Kevin has resisted the installation of any automated payment systems for the parking garage because he is worried that they are not always reliable and prefers instead the more personable approach of having someone, like his nephew Tom, at the parking garage exit to collect the parking fees in cash. When a driver enters the parking garage, they get a ticket with the entry time and then they present this to Tom, who calculates the amount owed when exiting.

Instructions

(a) What internal control weaknesses will Vanessa report to her father?

(b) If Vanessa wanted to determine how much money has been stolen or lost from the hotel, how could she do this? Is it possible?

(c) What steps can the hotel take to avoid the possibility of fraud in the future?