Red Bluff Inn and Café
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The first issue in terms of potential fraud comes from the small amount of management that is available to oversee employee actions within the café. It is important to have individuals in place who can focus on the training and supervising of employees, who can ensure that employees are following proper protocol. The cash only moves between the employees working registers and the couple who are managing the business, so it would not be difficult for an employee to abuse this lack of controls by destroying receipts and taking cash for themselves. To combat this, Mr. Fernandez can also hire or designate an employee to specifically handle cash counts before the money transfers from the employee handling the registers to the couple. This would allow the owner to know that the cash isn’t being mishandled, as there would be records of cash both at the beginning and end of the shifts. AU Section 315 (2012) stresses the importance of segregation of duties, and creating positions that act as middle-men for money would enable this segregation by ensuring there are more unbiased individuals handling the cash each day. The second issue that arises comes from the part-time staff, and their potential chances to commit fraud. When dealing with items such as the café, you are allowing these employees opportunities to commit both fraud against your business by taking cash for personal use. For this, it is important that Mr. Fernandez put in place a strong code of ethics policy, and to ensure that there are individuals in place who are training the employees to follow these standards. When it is difficult to remove opportunity for fraud, it is impertinent that the business remove any form of rationalizations that employees can make. Also, it is important for Mr. Fernandez to implement a hotline for employees to utilize where they can act as