BACKGROUNDINFORMATION FOR ALL CASE SCENARIOS<?xml:namespace prefix = o ns= "urn:schemas-microsoft-com:office:office" />
Crystal Smith had been the Director of the FinanceDepartment of Junction
Falls, USA, for nearly eight years. On a recenttrip to Florida, she visited her
sister and decided that she would like a change ofscenery. Crystal interviewed
for several jobs and accepted an accountingposition in the Finance Department
of a large Florida city. Her replacement inJunction Falls is Joe Metros. Joe, who
had been the Deputy Director of the FinanceDepartment in a nearby town for the
past five years, is very pleased with this newposition because it represents a
promotion.
A reporter from the Junction Falls DailyObserver interviewed Joe for a feature
article in the business section. Joe talked abouthis family and the many
civic activities that he supported, bothfinancially and by volunteering his time.
He also discussed his vision for the future of theFinance Department and identified
a number of short-term and long-term goals.Initially, Joe wants to implement
a number of changes designed to improve theefficiency and effectiveness of
departmental operations. He plans to eliminate anumber of accounts that are
rarely used. He also hopes that financialinformation can be provided more quickly
when requested by citizens or other city agencies.He notes that prompt responses
should increase public confidence in the FinanceDepartment. Joe is especially
concerned about the extent of employee turnover.Five of the seven department
employees have held their current positions lessthan one year, and training costs
can be rather significant. Joe has been told thatthe previous Director, Crystal
Smith, was very controlling and task-oriented, andthat this may have caused
employees to seek employment elsewhere.
Joe notes that the city does not have an internalaudit staff. However, the
local accounting firm of Watson & Watson, LLPhas audited the city%u2019s Comprehensive
Annual Financial Report for each of the past 13years. The city has been
growing steadily for the past several decades andcurrently has a population just
over 73,000. Last year, Junction Falls collectedover $89 million in gross operating
revenues. In addition to Joe, the FinanceDepartment includes the following
personnel (see Figure 1):
%u2022 Libby Jones, Chief Accountant. She managesand maintains the General Ledger.
Libby is also responsible for general officemanagement and day-to-day
operations in the department. She earned a degreein accounting from the
local university and has worked for the departmentfor 15 years. Libby is 37;
her husband owns a local hardwarestore.
%u2022 Marsee Weston, Senior Accountant. She isresponsible for monitoring fixed
assets. She also maintains all records of cityfixed/real assets and maintains/
monitors all city construction and acquisition ofreal asset contracts. Marsee
has been employed by the department for eightmonths. She is 39; her husband
teaches mathematics at the local highschool.
%u2022 Scott Smyth, Senior Accountant. He is theCash Manager; maintains bank
relations; manages all city investments; monitorsdebt-service requirements;
performs all wire transfers of city funds; andreconciles all bank accounts. Scott
is 32 and has been employed by the department forseven months. Scott%u2019s wife
is a sales associate at one of the localautomobile dealers.
%u2022 Cathy Elgin, Staff Accountant. Shemaintains all records pertaining to Accounts
Receivable; invoices those who owe funds;maintains control of all Petty
Cash Funds within the city; accounts for all dailydeposits from departments
and divisions within the city; and is also thesecondary payroll clerk. Cathy is
27 and has been employed by the department foralmost nine months. Her
husband is employed by the U.S. PostalService.
%u2022 Bob Thomas, Accounts Payable Clerk. Heprocesses all city payments to payees for last names beginning withA through L. Bob is 36 and has worked in the
department for almost two years. He is single andhas lived in town his entire
life except for the five years he served in theU.S. Navy.
%u2022 Nora Stewart, Accounts Payable Clerk. Sheprocesses all city payments to payees
for last names beginning with M through Z. Nora is20, and has been employed
by the department for six months. She is singleand lives in an apartment
complex near the university campus.
%u2022 Chuck Sanchez, Payroll Clerk. He processesall bi-weekly and monthly payrolls
and maintains all payroll records. Chuck is 31,recently divorced, and has
been working in the department for ten months.Chuck lives in an older neighborhood
with his 7-year-old son.
Scenario #3
In an attempt to discover new areas where costsavings might be achieved,
Joe has spent much of his spare time examining thefiles containing the Junction
Falls RFPs (Requests for Proposal). Joe concludesthat most low bidders are
awarded a contract. Occasionally, however, the lowbid is not accepted. For example,
because the low bidder was notorious fordelivering spoiled merchandise,
they did not get the contract. Instead, the LoneStar Farm Patch was awarded
the bid to supply fruits and vegetables to theJunction Falls Jail. Joe notes that
most files contain several bids, some as many as adozen. Joe finds one file (to
supply computers to certain city offices) thatcontains only a solitary bid from
Able Computers. Joe asks Marsee, who prepares allspecs for fixed asset RFPs
and approves all contracts, what caused such apoor response from potential suppliers.
Marsee points out to Joe that the RFP specifiedthat supplier personnel
must be able to respond to a city call formaintenance, upgrades, or repairs within
30 minutes. She suggests that perhaps manysuppliers were not willing to guarantee
such a prompt response time.
In preparation for the upcoming annual audit, BillWatson, the external auditor,
asked Marsee to provide him with a list of allfixed assets, including the inventory
identification number, date of purchase, cost, andcurrent location of each
item on the list. After a week, Marsee still hasnot printed out the list for the
auditor. The audit starts in two weeks. When askedabout the delay, Marsee says
that she has been so busy that she %u201Chas nothad time to think about any new
projects.%u201D Marsee is very busy, and oftenarrives very early for work and leaves
the office rather late at night.
On Monday during lunchtime Bob receives a phonecall from Able Computers,
asking whether Able%u2019s last request forpayment has been processed. Since Marsee
is unavailable to respond to this query, Bob callsthe city office that was to have
received the computers and learns that no suchdelivery from Able Computers
has been received.
