ACC 100 Study Guide - Final Guide: Canadian Tire, Target Canada

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12 Apr 2016

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Managers/business owners need to know how much inventory a business has throughout the year. This is important as you don"t want to run out of popular inventory items, as you could lose potenial sales. Customers may go elsewhere to get what they want. Some of those customers may never come back, so you might lose future sales too. When they opened their stores many of their shelves were empty due to supply issues. Customers came, saw the empty shelves, let, and never came back. Too litle inventory can be bad but too much inventory may be just as bad. First, it is expensive to store the inventory because you need addiional space to do so. That space is not revenue generaing (meaning it is not making the business any money in sales). Second, you spent money on the inventory and, while it is siing on your shelf, it too is not generaing revenue.

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Numerous frauds in the early 2000s spurred Sarbanes-Oxleylegislation (SOX). SOX changed the way businesses looked at andreported their internal control structure. Internal controls areneeded both to prevent and deter fraud as well as errors.Segregation of duties is the most commonly considered internalcontrol.

Ben's Barn is a successful, locally owned, organic farmer.Ben and his wife sell produce at local farmer's markets. The farmis the primary source of income for Ben and his family. Ben hasbeen in business for 10 years, and has developed a reputation forhigh quality produce. Ben's extensive greenhouses allow him to growvarieties not native to the local area, which commanded higherprices in the local markets.

This summer, the weather was perfect and Ben had a bumpercrop. Ben and his wife could not keep up, and made the decision tohire a part-time temporary employee for the firsttime. Ben took great pride in his produce, and made thedecision to send the employee to the farmer's market so that hecould tend to the harvest and provide the care he thought itneeded. Ben and the employee would load the produce inthe company's truck, and take it the farmer's market three (3)times per week. Once set up, Ben would spend some time talking withthe other vendors and regular customers, and then return to thefarm. The employee was responsible for cash sales to the marketcustomers. Some inventory was sold by the item, whileother inventory was sold by weight. They set up a small scale atthe booth each day to weigh produce. A portable cash register wasalso taken to register sales and provide receipts to customers. Theregister kept a duplicate copy of the receipts forreconciliation. The register also featured subtotalingfeatures which would add the sales for the day. At the end of theday, Ben would return to help load the remaining produce and closethe produce stand for the day. He would change out the registertape, but like any good farmer, often left the tapes in a folder inhis truck until he could remember to take them into thehouse/office. At the end of each week, Ben's wife made atrip to the bank to deposit cash receipts and to get the properchange/denominations to start the new week's cash box. Since herhusband was so busy, she wasn't able to catch up with him to getthe register receipts to match to deposits, so she just counted thecash and deposited it.

For his records, Ben recorded every detail of the harvest.He wanted to know how to plan for the next season. He recordedquantities and weights of produce harvested by variety. He trackedthe harvest daily, but never reconciled it to sales at the marketand produce that was returned from the market.

Harvest continued to be exceptionally busy. As a result, Bencould barely keep up with writing his employee a weekly payrollcheck. When the bank statements came at the end of the month, hewas too busy for paperwork and failed to reconcile statements untilthe following month. After all, he and his wife had run thebusiness for 10 years this way, he would catch up on paperwork whenit slowed down.

At the end of the season, Ben finally slowed down enough tocatch up on paperwork. He began to review the bank statements, andnoticed that deposits were less than they had been in prior years,when harvests had not been as good. Ben was certain that he hadsold more inventory. In fact, he knew he had because half-waythrough the season he had added an additional day of sales (a 4thmarket) each week. Ben had helped load the truck at the end of eachday, and only a small amount ever returned to the farm. What couldhave happened? Did the employee have something to do with this?Would Ben ever know how much he lost?

For this exercise, your job is to identify controls and putcontrols in place to prevent the loss of a company's liquid assets:cash & inventory.

IF the losses did occur, identify control mechanisms that couldbe put in place to timely detect the losses. Why do you believethose mechanisms would have been effective?

coppercat654

Read or listen to Morals in Business: Walter Pavlo Share your thoughts and opinions regarding this real life situation. Be sure to include your ideas about what businesses can do to avoid similar problems.

https://spotlightenglish.com/listen/morals-in-business-walter-pavlo

Transcript Voice 1 Hello. Iâm Marina Santee. Voice 2 And Iâm Ruby Jones. Welcome to Spotlight. This programme uses a special English method of broadcasting. It is easier for people to understand, no matter where in the world they live. Voice 1 Would you consider stealing six million [6,000,000] dollars from a company, if you had the chance? Most people would immediately answer ânoâ to this question. The majority of people consider themselves to be good, honest citizens. Walter Pavlo used to describe himself like this. Walter was a young, successful business man. He studied hard. And he worked hard. In time, he got a good job at an international communications company called MCI. MCI managed billions of dollars each year. Walterâs office was a highly pressured working environment. Walter worked hard to meet targets and goals. If someone had asked him back then - would he steal six million dollars from the company? He would have answered, âNo way!â Yet only a few years later, Walter went to prison for stealing money from MCI. What made this good man turn to crime? Here is his story. Voice 2 Walter Pavlo was born into a good family. His parents taught him Christian values. He said; Voice 3 âI was taught, âdo not stealâ; âdo not cheatâ; âbe honestâ; âbe truthful in everything that you do.â Voice 2 Walter held these values for a long time. However, slowly, other values in the business world began to influence him. At the age of thirty-two, Walter was a senior manager at MCI. He managed millions of dollars. His job was very pressured - and difficult. Then, for the first time in his life, it looked like Walter would not meet his targets. He had to do something. He asked a co-worker for advice. His friend told Walter to cheat a little. He told him that everyone else was doing it. It was normal. Voice 1 Pavlo looked around him. It seemed that his friend was right. The world of business was full of successful cheats. Maybe a little dishonesty was not so bad. In his mind, Walter rationalised cheating. He made it seem reasonable. Voice 2 Pavlo learned how to hide customersâ debts. He made small changes in the companyâs financial books to make them look better. This meant that Walter kept his good record of achievement. And it meant that the companyâs records looked good to investors. Voice 1 However, this led Walter to a bigger temptation. Why not use the same method of dishonesty to enrich himself? Again, Walter rationalised his plan. He said later; Voice 3 âTo me it looked like everyone was cheating. And I joined in. It did not seem that bad. Customers were getting richer. And I wanted my share.â Voice 2 Something else was happening inside Walter. He was becoming hostile in his heart. All around him were lies and cheats. He saw that people only cared about themselves. He saw the company and customers making themselves richer. He said, Voice 3 âI hated the customers. I hated the company. And then, I hated myself. Then, nothing mattered anymore.â Voice 1 And so, Walter set up a secret bank account in the Cayman Islands. Customers with debts paid money directly into this bank account. Then, Walter made their debt disappear on MCIâs records. Over a six month period, Walter and a co-worker took six million dollars! Voice 2 However, as time passed, Walter became afraid. He lived in fear of getting caught and arrested. The lies and secrets created much pressure. Walter said he became emotionally unbalanced. He came to believe that he would surely be caught - it was only a question of when. Voice 1 After a few months, MCI noticed a series of payments going into a Cayman bank account. They questioned Walter about it. Walter remembers; Voice 3 âI just said I did not want to talk about it. In a way I could not avoid uncovering my secret, because I was no longer able to hide what I was doing.â Voice 1 Walter resigned from MCI. He hoped that the investigations would stop. But they did not. MCI called in the police. Voice 2 Pavlo admitted his crime. His punishment was a prison sentence of three years and five months. He would also have to sacrifice some of his future earnings - over the next twenty-seven [27] years. Voice 1 In prison, Pavlo learned a lot about himself. He looked at the process that resulted in such severe crime. He said; Voice 3 âI do not think of myself as a bad person. For me to do something bad, or illegal, I have to make myself believe it is not bad. I rationalised, reasoned, what I was doing. I did this so much that I became far removed from reality. I told myself things like - everyone else is doing it, I need to get by, my family deserves this - and so on. This is what happens to a lot of people. They will rationalise in order to do something wrong.â Voice 2 Walter finished serving his difficult sentence in 2003. Life outside of prison was not to be easy either. His wife had divorced him. His friends had disappeared. No one wanted to employ the man who had stolen millions. However, people did want to hear about it. Voice 1 Many businesses saw the power of telling such a story. It could prevent their employees making the same mistake. Business schools and universities wanted their students to hear Walterâs story. Voice 2 And so Walter decided on a new kind of work. Today, he goes into business schools, companies and universities. He tells his story. He warns people of the easy path that leads to crime. He gives this message to business students: Voice 3 âThe chance of you facing a difficult moral decision at some time in your business life is one hundred percent. It will happen. There is no way round it...â âYou will never know what your values are worth until the test. The things that your parents have taught you, the things that you learned in school. What about them? When you are tested, what will you do?â Voice 1 Walter Pavloâs values had not survived this test. However he hopes that his weaknesses may strengthen others. He hopes that his story will strengthen peopleâs values. And then, when they are tested they will not fall. Voice 2 The writer and producer of todayâs programme was Marina Santee. All quotes were adapted for the programme. The voices you heard were from the United Kingdom and the United States. Computer users can hear our programmes, read our scripts and see our word list on our website at http://www.radio.english.net. This programme is called, âMorals in Business: Walter Pavloâ Voice 1 You are welcome to comment or ask about todayâs programme. You can e-mail us at radio @ english . net. Thank you for joining us today. Until next time. Goodbye.

Apex Art has been requested to prepare a bid on 500 pieces offramed artwork for a new hotel. Winning the bid would be a bigboost for sales representative Jason Grant, who works entirely oncommission. Sonja Gomes, the cost accountant for Apex, prepared thebid and calculated full product Costs of $121,000. Based on thecompany policy of pricing at 125% of full cost, Gomes gives Grant afigure of $151,200 to submit for the job.

Grant is very concerned. He tells Gomes that at that price, Apexhas no chance of winning the job. He confides that he spent $500 ofcompany funds to take the hotelâs purchasing agent to a basketballplayoff game where the purchasing agent disclosed that a bid of$145,000 would win the job. He hadnât planned to tell Gomes becausehe was confident that the bid she developed would be below thatamount. Gomes reasons that the $500 he spent will be wasted if Apexdoesnât capitalize on this valuable information. In any case, thecompany will still make money if it wins the bid at $145,000because it is higher than the full cost of $121,000.

Gomes suggests that if Grant is willing to use cheaper materialsfor the frame, he can achieve a bid of $145,000. The artwork hasalready been selected and cannot be changed, so the entire amountof the reduction in cost will need to come from framingmaterials.

A note regarding the bidding process:

The hotel would announce that it is seeking bids from suppliersinterested in providing the artwork. The hotel would specify theirrequirements and a deadline for submitting bids. All interestedcompanies, such as Apex Art, would submit bids in sealed envelopes.After the deadline has passed, the hotel company would unseal thebids and, assuming that at least one supplier submitted a bidwithin their maximum price (this is the info that Grant obtainedfrom the purchasing agent which is not normally known to thebidders) would award the job. Generally, but not necessarily, thejob is awarded to the company with the lowest bid.

Approaches to Ethical DecisionMaking

There is a large body of workstretching back thousands of years that discusses ethics. The listbelow is not intended to be either comprehensive or exhaustive. Itis intended merely to provide a basic roadmap of the approachesthat are commonly applied to business situations.

Long Term Self-interest(Egoism) - You should never take any action that is not inyour or your organizationâs long-term self-interest.

PersonalVirtue - You should never do anything that is not honest,open, and truthful and that you would not be glad to see in thenewspaper or TV.

Religious Injunction- You should never take an action that is unkind or thatharms a sense of community.

GovernmentRequirements - The law represents the minimal moralstandards of society, so you should never take any action thatviolates the law.

Utilitarian Benefits- You should never take an action that does not result ingreater good for society. (cost vs. benefitanalysis)

Individual Rights âYou should never take an action that infringes on othersâ agreedupon rights.

Justice - You shouldnever take an action that would result in an unfair sharing ofbenefits or obligations.

Stakeholders are persons orgroups with a legitimate interest in a company. Choose one or moreas the most significant (but not all of them).

PrimaryStakeholders

Primary Stakeholders

Secondary Stakeholders

Shareholders

Employees

Customers

Suppliers

Governments

Local communities

Special Interest Groups

Trade Associations

Media

Questions:

1. State and describe the issues, if any, which may potentiallyviolate ethical principles. Whose interests could be jeopardizeddue to the potential unethical behavior that you identified?Provide reasons why these stakeholdersâ interests can bejeopardized.

2. What is Gomesâ rationale after Grant confides in her? Discussthe alternative courses of action that Gomes can take and thepossible outcomes.

3. What should Gomes do, and why? Elaborate.

4. What can you conclude if Grant were to take Gomesâsuggestions, and what could be the consequences? What could be thepossible consequences for taking the suggestion that yourecommend?

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ACC 100 Study Guide - Final Guide: Canadian Tire, Target Canada

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