...Leo’s Four-Plex Theater Summary & Issues Leo Antonelli runs a theater out of a small town in west Texas called “Leo’s Four-Plex Theater’ which he has found to be less profitable than first expected. He hired his nephew, Bill Reilly, to manage the theatre in his absence which has proven unsuccessful. Cash is missing, theater employees are incompetent and ticket counts don’t match the supposed sales numbers. Park Cockerill, professional accountant, was brought in to assess the complications with the business and the main issues pinpointed were of these sorts: 1. Employees and Management: * Young, incompetent employees are the main staff and it being a small town, most know the customers coming in. * Free admissions have been authorized by manager, Bill Reilly, for customers on occasion. * Lack of good management oversight or policies in place to govern employee actions. 2. Movie Ticket Issues * Customers are let in free of charge by employees, including management signing off on free tickets. * Amount of stubs don’t match daily revenue numbers from supposed ticket sales. 3. Missing Cash * Miscounts happen with cash as lack of care is taken, and potential theft, with handling. Not enough MCSs in place to counteract potential thefts or miscounts. * Regular cash discrepancies per cashier and the occasional large cash shortage (e.g. $100). Park noticed that employees either failed to collect cash from the customers or failed to...
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...Accounting, Organizations and Society 28 (2003) 127–168 www.elsevier.com/locate/aos Management control systems design within its organizational context: findings from contingency-based research and directions for the future Robert H. Chenhall Department of Accounting and Finance, Monash University, Clayton, Victoria 3168, Australia Abstract Contingency-based research has a long tradition in the study of management control systems (MCS). Researchers have attempted to explain the effectiveness of MCS by examining designs that best suit the nature of the environment, technology, size, structure, strategy and national culture. In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS to organizational context. The paper examines issues related to the purpose of MCS, the elements of MCS, the meaning and measurement of contextual variables, and issues concerning theory development. A final section considers the possibility that contingency-based ideas could encompass insights from a variety of theories to help understand MCS within its organizational context. # 2002 Elsevier Science Ltd. All rights reserved. 1. Introduction The three purposes of this paper are to provide a review of empirical, contingency-based research as it has developed...
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...In some cases it can be better to avoid control problems instead of implementing a management control system (MCS). Kenneth A. Merchant & Wim A. Van der Stede [11] describes four strategies for control problem avoidance; Activity elimination, Automation, Centralization and Risk sharing. Under are examples given on how Leo, from the case Leo´s Four-Plex Theater [12], could apply these strategies for existing control problems in the organization. Activity elimination means that a control problem caused of a certain activity within an organization is avoided by they stop doing the activity themselves and instead letting a third party taking over the risk and profit associated with it. The persons working in the refreshment stand don´t register and collect cash for all sales, so it is not as profitable as it could be. If the cost for implementing a MCS to deal with the problem is too high Leo could lease the space. By arranging such a deal he will get a certain regularly payment from the contractor, eliminating the control problem associated with the activity, but he will loss the profit from the refreshment stand. Automation is a way to avoid control problems by using technology like computers, machines and robots, instead of humans. By using automation it is possible to eliminate certain problems related to humans, like lack of motivation, inconsistency and dishonesties. Leo could solve the problem with employees sometimes let people enter the screening room that have...
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...What is the problem? Leo Antonelli owns a single theater with four screens in West Texas. While Mr. Antonelli owns the theater, he does not manage it. Mr. Antonelli, who was concerned about the profitability of the theater, engaged the services of a local accounting professor to observe the processes at the theater and report on the effectiveness of the internal controls in place. The analysis and recommendations presented below are based on the internal control report. Question 1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theater’s problems caused primarily because of lack of discipline in using the existing controls? Leo’s Four-Plex has four internal controls in place. These controls are presented in Table 1. Even though there are internal controls in place, the controls are not rigorously applied and are insufficient to control the flow of cash in the theater. Mr. Antonelli asked a local accounting instructor, Mr. Cockerill, to observe the theater and provide comments. Table 2 presents the internal controls in place and Mr. Cockerill’s findings. Question 2. What control improvements would you suggest for Leo’s Four-Plex? I suggest some definite and immediate changes be made to the internal control of cash at Leo’s Four-Plex Theaters. The most obvious deficiency is the focus on non-monetary controls. There are three internal controls devised to make sure that customers see the movie they paid for (color-coded...
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...Leo’s Four-Plex Theater Elaine Sanders ACC 6003 Spring 2016 What is the problem? Leo Antonelli owns a single theater with four screens in West Texas. While Mr. Antonelli owns the theater, he does not manage it. Mr. Antonelli, who was concerned about the profitability of the theater, engaged the services of a local accounting professor to observe the processes at the theater and report on the effectiveness of the internal controls in place. The analysis and recommendations presented below are based on the internal control report. Question 1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theater’s problems caused primarily because of lack of discipline in using the existing controls? Leo’s Four-Plex has four internal controls in place. These controls are presented in Table 1. Even though there are internal controls in place, the controls are not rigorously applied and are insufficient to control the flow of cash in the theater. Mr. Antonelli asked a local accounting instructor, Mr. Cockerill, to observe the theater and provide comments. Table 2 presents the internal controls in place and Mr. Cockerill’s findings. Question 2. What control improvements would you suggest for Leo’s Four-Plex? I suggest some definite and immediate changes be made to the internal control of cash at Leo’s Four-Plex Theaters. The most obvious deficiency is the focus on non-monetary controls. There are three internal controls devised...
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...Marshall School of Business University of Southern California Leo’s Four-Plex Theater Teaching Note Purpose of Case This case is intended as an in-class, “warm-up” case. It is particularly useful on the first day of class where students cannot be made to prepare a longer case prior to class. The case motivates the students (1) to think about the meaning of good control; (2) to consider a number of different forms of controls; (3) to think about the design vs. the implementation of the various forms of controls; and (4) to consider costs in their recommendations. Questions 1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theatre’s problems caused primarily because of lack of discipline in using the existing controls? 2. What control improvements would you suggest for Leo’s Four-Plex? Analysis I recommend starting the discussion by asking students to list the controls discussed in the case and the purpose of each. That will lead to the preparation of the chart shown in Exhibit TN-1 below. Then the discussion can move into the analysis of the problems and possible solutions: 1. The cashier’s collect less cash than the value of the tickets sold (or missing). The common solution is to make the cashier’s pay for the shortage, or at least have shortages comprise a significant portion of the employees’ performance evaluation. 2. Some refreshment stand sales seem to be lost because the attendants do not collect cash ...
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...Marshall School of Business University of Southern California Leo’s Four-Plex Theater Teaching Note Purpose of Case This case is intended as an in-class, “warm-up” case. It is particularly useful on the first day of class where students cannot be made to prepare a longer case prior to class. The case motivates the students (1) to think about the meaning of good control; (2) to consider a number of different forms of controls; (3) to think about the design vs. the implementation of the various forms of controls; and (4) to consider costs in their recommendations. Questions 1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theatre’s problems caused primarily because of lack of discipline in using the existing controls? 2. What control improvements would you suggest for Leo’s Four-Plex? Analysis I recommend starting the discussion by asking students to list the controls discussed in the case and the purpose of each. That will lead to the preparation of the chart shown in Exhibit TN-1 below. Then the discussion can move into the analysis of the problems and possible solutions: 1. The cashier’s collect less cash than the value of the tickets sold (or missing). The common solution is to make the cashier’s pay for the shortage, or at least have shortages comprise a significant portion of the employees’ performance evaluation. 2. Some refreshment stand sales seem to be lost because the attendants do...
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...In-class activity 1: Identifying control problems and MCS Source case / paper: Wong’s Pharmacy (textbook p. 20) AND Leo’s Four-Plex Theater (textbook p. 19) In-class activity questions / objectives: Wong’s Pharmacy: 1. What is the main problem facing Wong’s pharmacy? 2. What options are available to Thomas Wong? Leo’s Four-Plex Theater: 3. What are the key controls problems at Leo’s Four-Plex Theater? 4. State the control measures implemented in the theatre and the purpose and limitations of each 5. Are the problems caused primarily by inadequate existing controls and what improvements would you suggest? In-class activity 2: The role of management accounting information in controlling an organisation Source case / paper: Kaplan, R. S., 1984, The Evolution of Management Accounting, The Accounting Review, Vol. LIX, No. 3, pp. 390-418 (SO page 92 to 120). In-class activity questions / objectives: 1. What is the role of accounting information in controlling an organisation? 2. Outline the historical development of the use of management accounting information to control organisations. 3. Why may profit not be a good criterion to “motivate and evaluate short-term performance” in all cases? In-class activity 3: Controls at the Bellagio Casino Resort Source case / paper: Case Study: Controls at the Bellagio Casino Resort (textbook p. 134) In-class activity questions / objectives: Focus on the three key roles at three levels of authority in the...
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...Leo’s Four Plex Theater Problems: 1. Lack of motivation: * Discrepancies in the cash counts of the ticket booths – the cause behind this situation is the lack of motivation that leads to employee theft and neglecting of duties. * Failure of the cash collection from known customers – Employees are not motivated enough to perform their jobs sincerely and also do not know why they should collect cash, though there is no reason for personal limitation. * Unethical practice at ticket collection - Bill Reilly, the manager, gives out a significant number of free tickets with his signature on them. Due to lack of motivation among employees, this fact has created a scope to do unethical practice and thus ticket collectors might be giving free passages to friends/known customers. 2. Lack of direction: * Taking advantage of family relationship – Being a relative of the Theater’s owner, manager is not maintaining any organization hierarchy and exploiting his power by giving free tickets to friends. This is because of lack of direction from the owner – Leo Antonelli. * Discrepancies revealed in test count – The attendants at the turnstile are not checking the tickets carefully enough since tickets with wrong dates and colors go into the wrong stub boxes. Inadequate direction on job responsibility leads them to not understanding the value of counter check. Solutions: 1. Owner of the Theater should give proper direction to manager to set specific objectives...
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...Delprov 1 1. Inledning 1.1 Problem Vid en genomgång av caset Leo’s Four-Plex Theaters räkenskaper fann professorn att det fanns vissa problem inom verksamheten. Professorn noterade att det fanns en differens mellan försäljningsintäkterna och värdet av de sålda biljetterna. Skillnaden var de flesta gånger liten, men denna gång saknade en kassör 100$ i försäljningsintäkter, vilket måste tolkas som mer än en differens som uppstår på grund av svinn. Ett annat problem var att kassörerna som sålde förfriskningar var unga, och kände många av kunderna eftersom de var jämnåriga. Detta gjorde att det ibland hände att de inte tog betalt, eller inte slog in köpet på kassaapparaten. Det hände även att kunder med utgångna biljetter släpptes in på föreställningarna, vilket troligen skedde på grund av att biljettkontrollanten kände kunden. Professorn noterade även att ett stort antal gratisbiljetter utfärdats av en viss kassör vid namn Bill Reily. 1.2 Bakomliggande orsaker till problemen Vi identifierade bakomliggande orsaker till problemen som att det inte fanns någon tydlig företagskultur. Dessutom fanns det för lite styrning i verksamheten, vilket gjorde det oklart för personalen vad som förväntades av dem. Detta i sin tur resulterade i att medarbetarna saknade motivation att utföra sitt arbete på ett tillfredsställande sätt. Vi drog slutsatsen att det huvudsakliga styrproblemet var bristen på vägledning, de anställda verkar inte förstå vad som förväntas av dem. 2. Styrformer 2...
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...------------------------------------------------- Course OutlineDepartment of Accounting and FinanceSchool of Business and Economics | ACCT 4250-01 Advanced Management Accounting (3,0,0) MWF 1:30-2:20 PM A&E 208 Instructor: Dr. Laura Jean Kreissl Office: IB 2060 Office Hours: please check office door Email: lkreissl@tru.ca Email is strongly recommended over voicemail as it is checked more frequently Phone/Voice Mail: 250-852-7675 Last Updated: November30, 2015 Calendar Description Building on ACCT 3250: Intermediate Management Accounting, students explore the integrative and interdisciplinary role of management accounting and its contribution to the strategic management process and the provision of quantitative and non-quantitative information for planning, control, and decision making. Topics include management control systems; results controls, action, personnel and cultural controls; control system tightness; control system cost; designing and evaluating management control systems; financial responsibility centers including transfer pricing; planning, and budgeting; incentive systems; financial performance measures; the myopia problem; uncontrollable factors; corporate governance; and ethical issues. | Educational Objectives/Outcomes Upon completing this course, students will be able to: 1. Locate the role of Management Control Systems (MCS) in both strategy and operations. 2. Describe results control and its applications. ...
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...Control Andreas Torbiörnsson 09 How could each of the control problems at Leo´s Four-Plex Theater be solved with the use of Cultural control? Cultural control is a type of control that encourages mutual monitoring1 and it builds a lot upon group pressure. The main idea of cultural control is to get the employees to watch over each other and to create a culture that has certain things that you specifically do or don’t do. It aims to set up shared beliefs and norms in that company, rules of behaving that everyone abides by. The case of Leo’s Four-Plex Theater has a number of control problems that I can identify. They are as follows: Discrepancies in the cash counts of the ticket booths. Most likely caused by a lack of motivation that leads to employee theft and neglecting of duties. The employees working in the refreshment stand sometimes do not collect cash from customers or doesn’t register the sale on the cash register. This is also most likely caused by a lack of motivation, it can’t be lack of direction since they know what they should do and neither could it be a personal limitation since they know how to operate the machine and how to collect payment. The problem seems to be that they don’t know why they should collect the cash. Test counts reveal that the number of tickets sold or put into the stub box isn’t equal to the amount of customers entering and leaving the theater. This seemed to be caused by three factors: o The attendants at the turnstile aren’t checking...
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...Control Andreas Torbiörnsson 09 How could each of the control problems at Leo´s Four-Plex Theater be solved with the use of Cultural control? Cultural control is a type of control that encourages mutual monitoring1 and it builds a lot upon group pressure. The main idea of cultural control is to get the employees to watch over each other and to create a culture that has certain things that you specifically do or don’t do. It aims to set up shared beliefs and norms in that company, rules of behaving that everyone abides by. The case of Leo’s Four-Plex Theater has a number of control problems that I can identify. They are as follows: Discrepancies in the cash counts of the ticket booths. Most likely caused by a lack of motivation that leads to employee theft and neglecting of duties. The employees working in the refreshment stand sometimes do not collect cash from customers or doesn’t register the sale on the cash register. This is also most likely caused by a lack of motivation, it can’t be lack of direction since they know what they should do and neither could it be a personal limitation since they know how to operate the machine and how to collect payment. The problem seems to be that they don’t know why they should collect the cash. Test counts reveal that the number of tickets sold or put into the stub box isn’t equal to the amount of customers entering and leaving the theater. This seemed to be caused by three factors: o The attendants at the turnstile aren’t checking...
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...Budgeting and Control MHRM 502-2 Supported Distance Program June 2015 Addis Ababa Table of Contents Title Page Unit One: Overview of Budgeting and Control .............................................................................. 2 1.1. The Basic Concepts of Budget and Budgeting ................................................................ 2 1.2. Definition of Budget ........................................................................................................ 3 1.3. Budgeting and Forecasting .............................................................................................. 4 1.4. Budgeting and Management ............................................................................................ 6 1.5. Budgeting and Planning ................................................................................................... 6 1.5.1 Purposes of Planning and Budgeting systems ................................................................. 7 1.5.2 Limitation of Budgeting................................................................................................. 10 1.5.3 Planning Cycles ............................................................................................................. 11 1.6. Budgeting process (Budget cycle) ................................................................................. 14 1.6.1 Designing the budget ...............................................................................
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