1. The two biggest concerns relating to possible fraud for the motel part of the business are: a) The couple failing to record hotel guest stays in order to steal the cash paid. By not recording the hotel stay their cash reconciliations would be clear. b) The couple has no incentive help the motel perform at a profit since they are paid at salary. Since there is a high demand for their motel, service and quality could take a significant slip without losing too much money. The first control that could be set in place is through the intake process. Mr. Fernandez can easily set in place controls that would automatically create a transaction every time a new key was created.
This is assuming the doors are operated with electronic keys. The only way this key system would work is if the keypad reset once the client was checked out of the system. Meaning the key would no longer work on that room and would need to be reprogramed i.e. create a new charge in the system. Another control that Mr. Fernandez could set in place would be to give the couple incentivized pay. It could be made up of both a base salary and bonuses based on the motel’s performance. Separation of duties- Might be limited because there are a small number of ppl.
Have the cleaning staff report directly to Mr. Fernandez to let him know how many rooms they cleaned. Rooms cleaned should meet revenue. Tip line- If you don’t receive a receipt call this number. 2. The two biggest concerns relating to possible fraud for the café part of the business are: a) Cash Receipts- Again the couple has too much control over transactions being recorded and the handling of money. b) Inventory- The café inventory is a big concern because it is probably one of the most vulnerable assets behind cash. Mr. Fernandez can set up cameras in the café and the motel that he can access remotely. This would be one way to deter the couple as well as employees. One of the best ways to make sure the couple and their staff is recording all meals sold is to have an touch screen order taking device.
The customers can order the meals themselves or have their waitress/waiter record their order on a hand held mobile device. This recording system would also be able to keep track of any discounts or compensated meals the couple gives out. Another control that would need to be put in place is a monthly inventory check. This would help keep track of what items are being used in relation to what revenue is being produced. High inventory turnover with lower than usual revenue would probably prompt Mr. Fernandez to check the camera’s for stolen inventory. Preload the menu with set meals/price. Everything should match revenue and inventory. The Café should be separate from the motel.
All goods should be sent through Mr. Fernandez so that he can see what the couple is buying. 3. If the system automatically created a charge in the system, this would not only keep track of what rooms are available, but it would also encourage the employees to accurately check-in and out each guest to avoid discrepancies with money collected and money due from a customer’s stay. By paying the couple an incentive based salary they will most likely perform better for the benefit of the motel and café. They will be motivated to hire the most qualified staff that would help create a profitable business. Having the cameras installed in the motel and café wouldn’t cause any issues with productivity.
By having the customers and employees use an electronic device to record meal orders would increase efficiency because orders could be instantly sent to the kitchen to be made. Performing an inventory for the kitchen’s assets every month might not be too efficient but it would be effective. Depending on how large the café is, having staff perform inventory every month might be too much of an arduous task. 4. I believe the proposed controls would help boost productivity and benefit the motel/café’s day to day operations. However, if Mr. Fernandez were to change the salary of the couple they might feel as if Mr. Fernandez is backing out on what he originally agreed to pay the couple. Mr. Fernandez could alleviate any animosity and tension by ensuring the couple that a good performance on their part could potentially bring in more money than their original base salary.