home work 3

The Butte Silver

-

Bow Golf Course

You are the owner of a privately

-

owned, small golf course in the city

of Butte, Montana. Your

father gave you the land for the golf course over 25 years ago, when the farm he had been

operating went out of business.

The golf course has done well since it was first built and includes a small shop that sells golf

equipment

, golf accessories, and golf clothing from the major golf manufacturers. In addition,

there is a very small restaurant that serves breakfast and lunch to golfers. Revenues and profits

from the golf course have grown significantly, especially in recent y

ears with the growth of the

golf as a sport in Montana. Your bookkeeping is done by a local accounting firm; they also

prepare the annual tax returns for the business.

The accountant assigned to your account prepares the books and monthly financial stat

ements.

She estimates that the business loses up to 10 percent of its profit each year to internal fraud.

Her estimates are based upon profits and operating margins at other golf courses, which are also

her clients. Fortunately, your business can afford

this loss, but perhaps the day will come when

the business cannot afford to continue losing money to internal fraud. All payroll

-

related

functions are outsourced to ADP; you approve all weekly payroll online before checks are

written to employees.

The g

olf course has 4 employees. One manages the golf shop; one manages the restaurant, and

the other two perform the daily maintenance required to operate a golf course during the season.

You have tried to put adequate internal controls in place. For exampl

e, you implemented

internal controls for placing orders for supplies required for the golf shop, for the restaurant, and

for golf course maintenance. Since you travel often, during your absence you allow the

employees to do what is required to keep the bus

iness running as smoothly as possible. Thus,

you have given permission for employees to sign checks to pay vendors for purchases.

In the past, you have caught employees participating in fraudulent activities. Since Butte is such

a small town, you have

never pursued prosecution of these fraudsters because you are afraid of

the negative publicity it would cause your business and possibly their former employers.

In responding to the questions related to this case, be sure to provide references for all sou

rces

you used. Your answers to this case study should be 5 pages in total, including cover and

reference pages. The body of the paper, which must be at least 3 pages in length, should be

double

-

spaced. Make a copy of each question below and place the qu

estions into the body of

your paper in bold

-

type, so that we can both see that you have addressed each one of the

questions in your submission.

Questions/Requirements

1. Given the scenario above, as the owner of this golf course, what/which aspects of t

he golf

course operations can you change immediately to reduce the amount of fraud that is

currently occurring? Be specific. Address, for example, the following areas (to get you

started):

The Butte Silver-Bow Golf Course

You are the owner of a privately-owned, small golf course in the city of Butte, Montana. Your

father gave you the land for the golf course over 25 years ago, when the farm he had been

operating went out of business.

The golf course has done well since it was first built and includes a small shop that sells golf

equipment, golf accessories, and golf clothing from the major golf manufacturers. In addition,

there is a very small restaurant that serves breakfast and lunch to golfers. Revenues and profits

from the golf course have grown significantly, especially in recent years with the growth of the

golf as a sport in Montana. Your bookkeeping is done by a local accounting firm; they also

prepare the annual tax returns for the business.

The accountant assigned to your account prepares the books and monthly financial statements.

She estimates that the business loses up to 10 percent of its profit each year to internal fraud.

Her estimates are based upon profits and operating margins at other golf courses, which are also

her clients. Fortunately, your business can afford this loss, but perhaps the day will come when

the business cannot afford to continue losing money to internal fraud. All payroll-related

functions are outsourced to ADP; you approve all weekly payroll online before checks are

written to employees.

The golf course has 4 employees. One manages the golf shop; one manages the restaurant, and

the other two perform the daily maintenance required to operate a golf course during the season.

You have tried to put adequate internal controls in place. For example, you implemented

internal controls for placing orders for supplies required for the golf shop, for the restaurant, and

for golf course maintenance. Since you travel often, during your absence you allow the

employees to do what is required to keep the business running as smoothly as possible. Thus,

you have given permission for employees to sign checks to pay vendors for purchases.

In the past, you have caught employees participating in fraudulent activities. Since Butte is such

a small town, you have never pursued prosecution of these fraudsters because you are afraid of

the negative publicity it would cause your business and possibly their former employers.

In responding to the questions related to this case, be sure to provide references for all sources

you used. Your answers to this case study should be 5 pages in total, including cover and

reference pages. The body of the paper, which must be at least 3 pages in length, should be

double-spaced. Make a copy of each question below and place the questions into the body of

your paper in bold-type, so that we can both see that you have addressed each one of the

questions in your submission.

Questions/Requirements

1. Given the scenario above, as the owner of this golf course, what/which aspects of the golf

course operations can you change immediately to reduce the amount of fraud that is

currently occurring? Be specific. Address, for example, the following areas (to get you

started):