Over the past two years, Kermit Stone, the controller of Hilton Company, has been concerned that the company has been paying a large amount of money for state unem- ployment taxes. On reviewing the “unemployment file” with the head accountant, Deborah Murtha, he learns that the company’s tax rate is near the top of the range of the state’s experience-rating system.
After calling the local unemployment office, Stone realizes that the turnover of employees at Hilton Com- pany has had an adverse effect on the company’s tax rates. In addition, after consulting with Murtha, he dis- covers that the eligibility reports that come from the state unemployment office are just signed and sent back to the state without any review.