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Francisco Fernandez recently invested in a small 26-room motel and café in a remote tourist area in

Francisco Fernandez recently invested in a small 26-room motel and café in a remote tourist area in Southern Utah. Francisco lives in Northern Utah, some five hours from the motel, and only plans to visit the motel periodically.
Francisco hired a young couple to manage the motel and café. They will live on-site and will have complete control over daily activities and record keeping.
Francisco is concerned about having little control over the operations of the motel and café. He has requested help in identifying possible ways the business could be defrauded and in establishing creative internal controls to deter such fraud.



Instructions to solve the case study
This case represents “Establishing Effective Internal Control in a Small Business”
It will help you as a student to understand types of frauds that can occur in a small business environment due to the lack of effective internal controls.
Also, to help you apply general business knowledge, reasoning abilities, and understanding of internal controls to identify controls that would be effective and efficient in reducing risks of material misstatements due to fraud.
You have to do the case individually.




Answer the following questions in details:
1. What are your two biggest concerns relating to possible fraud for the motel part of the business?
For each concern, generate two or three controls that could effectively reduce risk related to
your concerns. Use common sense and be creative!
2.What are your two biggest concerns relating to possible fraud for the café part of the business?
For each concern, generate two or three controls that could effectively reduce risk related to
your concerns. Use common sense and be creative!


3.Describe the impact each proposed control would have on the efficiency of running the
business. Are the controls you generated both effective and efficient?


4.Describe the potential impact of your proposed controls on the morale of the [4] couple in charge of the day-to-day operations. How might Francisco deal with these concerns?

Apr 04 2020 View more View Less

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