Jean Pate owns a casual restaurant. She has nice employees that have been there for over five years and the operations are consistently profitable. The waitress staff tends to turnover because she hires mostly students and their schedules change or they graduate and move. Jean recently met with her chef, manager and senior wait staff and made a list of potential risks. First, there is petty theft from employees, mainly eating unauthorized meals or not ringing up sales. Next, there is misreporting of tips. Both of these are seen as chronic but not high in amount. The possibility of customer complaints for bad service or food issues are a bit more costly because revenue and reputation are damaging, but these complaints occur less often. On the more serious side but less likely, there is the possibility of fire in the kitchen causing partial or total destruction of the building, which is wholly-owned by Jean. The worst outcome is the potential for poisoned food (mad cow, salmonella) which causes a law suit that can hurt reputation and deplete all the resources of the business and Jean's personal wealth. Jean Pate, the restaurant owner mentioned above, is concerned that his purchasing manager may be involved in a kickback scheme. If you were called in to review, what "red flags" would you look for? Be specific. For each red flag, what evidence would you collect to see if your theory was correct? 8 . 21 24 Jean Pate owns a casual restaurant. She has nice employees that have been there for over five years and the operations are consistently profitable. The waitress staff tends to turnover because she hires mostly students and their schedules change or they graduate and move. Jean recently met with her chef, manager and senior wait staff and made a list of potential risks. First, there is petty theft from employees, mainly eating unauthorized meals or not ringing up sales. Next, there is misreporting of tips. Both of these are seen as chronic but not high in amount. The possibility of customer complaints for bad service or food issues are a bit more costly because revenue and reputation are damaging, but these complaints occur less often. On the more serious side but less likely, there is the possibility of fire in the kitchen causing partial or total destruction of the building, which is wholly-owned by Jean. The worst outcome is the potential for poisoned food (mad cow, salmonella) which causes a law suit that can hurt reputation and deplete all the resources of the business and Jean's personal wealth. Jean Pate, the restaurant owner mentioned above, is concerned that his purchasing manager may be involved in a kickback scheme. If you were called in to review, what "red flags" would you look for? Be specific. For each red flag, what evidence would you collect to see if your theory was correct? 8 . 21 24
