BACKGROUND INFORMATION FOR ALL CASE SCENARIOS Crystal Smith had been the Dir

BACKGROUND INFORMATION FOR ALL CASE SCENARIOS
Crystal Smith had been the Director of the Finance Department of Junction

Falls USA for nearly eight years. On a recent trip to Florida she visited her

sister and decided that she would like a change of scenery. Crystal interviewed

for several jobs and accepted an accounting position in the Finance Department

of a large Florida city. Her replacement in Junction Falls is Joe Metros. Joe who

had been the Deputy Director of the Finance Department in a nearby town for the

past five years is very pleased with this new position because it represents a

promotion.

A reporter from the Junction Falls Daily Observer interviewed Joe for a feature

article in the business section. Joe talked about his family and the many

civic activities that he supported both financially and by volunteering his time.

He also discussed his vision for the future of the Finance Department and identified

a number of short-term and long-term goals. Initially Joe wants to implement

a number of changes designed to improve the efficiency and effectiveness of

departmental operations. He plans to eliminate a number of accounts that are

rarely used. He also hopes that financial information can be provided more quickly

when requested by citizens or other city agencies. He notes that prompt responses

should increase public confidence in the Finance Department. Joe is especially

concerned about the extent of employee turnover. Five of the seven department

employees have held their current positions less than one year and training costs

can be rather significant. Joe has been told that the previous Director Crystal

Smith was very controlling and task-oriented and that this may have caused

employees to seek employment elsewhere.

Joe notes that the city does not have an internal audit staff. However the

local accounting firm of Watson & Watson LLP has audited the city%u2019s Comprehensive

Annual Financial Report for each of the past 13 years. The city has been

growing steadily for the past several decades and currently has a population just

over 73000. Last year Junction Falls collected over $89 million in gross operating

revenues. In addition to Joe the Finance Department includes the following

personnel (see Figure 1):

%u2022 Libby Jones Chief Accountant. She manages
and maintains the General Ledger.

Libby is also responsible for general office management and day-to-day

operations in the department. She earned a degree in accounting from the

local university and has worked for the department for 15 years. Libby is 37;

her husband owns a local hardware store.

%u2022 Marsee Weston Senior Accountant. She is
responsible for monitoring fixed

assets. She also maintains all records of city fixed/real assets and maintains/

monitors all city construction and acquisition of real asset contracts. Marsee

has been employed by the department for eight months. She is 39; her husband

teaches mathematics at the local high school.

%u2022 Scott Smyth Senior Accountant. He is the
Cash Manager; maintains bank

relations; manages all city investments; monitors debt-service requirements;

performs all wire transfers of city funds; and reconciles all bank accounts. Scott

is 32 and has been employed by the department for seven months. Scott%u2019s wife

is a sales associate at one of the local automobile dealers.

%u2022 Cathy Elgin Staff Accountant. She maintains
all records pertaining to Accounts

Receivable; invoices those who owe funds; maintains control of all Petty

Cash Funds within the city; accounts for all daily deposits from departments

and divisions within the city; and is also the secondary payroll clerk. Cathy is

27 and has been employed by the department for almost nine months. Her

husband is employed by the U.S. Postal Service.

%u2022 Bob Thomas Accounts Payable Clerk. He
processes all city payments to payees for last names beginning with A through L. Bob is 36 and has worked in the

department for almost two years. He is single and has lived in town his entire

life except for the five years he served in the U.S. Navy.

%u2022 Nora Stewart Accounts Payable Clerk. She
processes all city payments to payees

for last names beginning with M through Z. Nora is 20 and has been employed

by the department for six months. She is single and lives in an apartment

complex near the university campus.

%u2022 Chuck Sanchez Payroll Clerk. He processes
all 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 cost savings might be achieved

Joe has spent much of his spare time examining the files containing the Junction

Falls RFPs (Requests for Proposal). Joe concludes that most low bidders are

awarded a contract. Occasionally however the low bid is not accepted. For example

because the low bidder was notorious for delivering spoiled merchandise

they did not get the contract. Instead the Lone Star Farm Patch was awarded

the bid to supply fruits and vegetables to the Junction Falls Jail. Joe notes that

most files contain several bids some as many as a dozen. Joe finds one file (to

supply computers to certain city offices) that contains only a solitary bid from

Able Computers. Joe asks Marsee who prepares all specs for fixed asset RFPs

and approves all contracts what caused such a poor response from potential suppliers.

Marsee points out to Joe that the RFP specified that supplier personnel

must be able to respond to a city call for maintenance upgrades or repairs within

30 minutes. She suggests that perhaps many suppliers were not willing to guarantee

such a prompt response time.

In preparation for the upcoming annual audit Bill Watson the external auditor

asked Marsee to provide him with a list of all fixed assets including the inventory

identification number date of purchase cost and current location of each

item on the list. After a week Marsee still has not printed out the list for the

auditor. The audit starts in two weeks. When asked about the delay Marsee says

that she has been so busy that she %u201Chas not had time to think about any new

projects.%u201D Marsee is very busy and often arrives very early for work and leaves

the office rather late at night.

On Monday during lunchtime Bob receives a phone call from Able Computers

asking whether Able%u2019s last request for payment has been processed. Since Marsee

is unavailable to respond to this query Bob calls the city office that was to have

received the computers and learns that no such delivery from Able Computers

has been received.