Choose one of the two decision cases below. Post your answer to the discussion thread.

IMPORTANT: You must post your answer to the discussion board before you can read or reply to any of your classmates.

CASE #1

This case is based on an actual situation. Centennial Construction Company, headquartered in Dallas, Texas, built a roadway motel 35 miles North of Dallas. The construction foreman whose name was, Slim Chance, hired the 40 workers needed to complete the project. Slim had the workers fill out the necessary tax forms, and he sent their forms to the home office.

Work on the hotel began April 1 and ended September 1. Each week, Slim filled out a time card for the hours worked by each employee during the week. Slim faxed the time cards to the home office, which prepared the payroll checks on Friday morning. Slim drove to the home office of Friday, picked up the payroll checks, and returned to the construction site. At 5pm on Friday, Slim distributed the payroll checks to the employees.

REQUIREMENTS

1. Describe in detail the main internal control weaknesses in this situation. Specify what negative result(s) could occur because of the internal weakness.

2. Describe what you would do to correct the internal control weaknesses.

CASE #2

Dylan worked for a propane gas distributor as an accounting clerk in a small Midwestern town. Last winter, his brother Mike lost his job at the machine plant. By January, temperatures were sub-zero and Mike had run out of money. Dylan saw that Mike's account was overdue and he knew that Mike needed another delivery to heat his home. He decided to credit Mike's account and debit the balance to parts inventory because he knew the parts manager, the owner's son, was incompetent and would never notice the extra entry. Months went by, and Dylan repeated the process until an auditor ran across the changes by chance. When the owner fired Dylan, he said, "If you had only to come to me about Mike's situation we could have worked something out."

REQUIREMENTS

1. What can a business like this do to prevent employee fraud of this kind?

2. What effect would Dylan's actions have on the balance sheet? Income statement?

3. How much discretion does a business have with regard to accommodating hardship situations?