Hasfhi Rahmat

1121002033
Accounting 2012
Case Leos Four-Plex Theater
Case questions :
1. Where is the theaters control system lacking? Are the controls themselves weak or
incomplete, or are the theatres problems caused primarily because of lack of
discipline in using the existing controls?
2. Identify the control improvements you would suggest for Leos FourPlex :
Answer:
1. The company is lacking at the control environment system the overall govenance of
the company which has been developed by the top level of the organization.
: It comprises of
i.
Corporate culture,
ii.
Ethics,
iii.
Quality of people to be hired,
iv. And how the company is controlled.
: the control in the theater is weak or incomplete
i.

Taking their jobs for granted

- failed to collect cash from the known customers
- lead to conflict of interest
- fail to identify the tickets carefully
- either wrong dates or color
ii.
Misuse the power and authority given
- give free tickets to customers that he likes by signing on the tickets
- didnt conduct any supervision on his employees
iii.
No proper segregation of duties
- The one who record the sales also the one who collect the cash
2. Identify the control improvements you would suggest for Leos FourPlex :
Set up basicc principles for employees to understand what is
expected and follow the rules
Manager should take responsibility to set up the code of
conduct
Hire someone to supervise the employees work
Segregation of duties
Authority and responbility
Hire qualified staff/employees

Wongs Pharmacy
Whats your advice for Wong Pharmacy do to solving the problem?

1. He could use savings from the past 30 years to update his current store: purchase
more kinds of medicines, lower the price of drugs and etc.. But these methods would
need large investments and may not have a satisfied result as expected. After all, a
single-location store is hard to compete over a large drugstore chain in current society.
2. Mr. Wong could change the strategic plan of his store by providing certain specific
medicines that the large drugstore does not have. This solution will help Wongs
pharmacy to obtain an absolute advantage.
3. Third, Wongs pharmacy could attract customers by offering certain rewards, let
customers enjoy a big discount when their purchase reached certain amount. Because
the store has already existed for 30 years in the same location, it must own good
reputation in the block.
Private Fitness, Inc
1. How could she ensure that her business received all the revenuesto which it was
entitled without being on-site at all times herself?
2. Should she leave Kate,who promised not to steal again, in the manager position? Or
should she hire one of theother instructors, or perhaps a non-instructor, to become a
manager?
3. And in either case,were there some procedures or controls that she could use to
protect her businesssassets?
Answer :
1. There is no proper recording of revenues. Revenue is dependent on the number of
clients attending classes and private workouts. There is however no recording system
to properly monitor the clients and number of workout attendees. There is no proper
recording of operating expenditures. Basic operational expenses like electric and

water bills, rent, bank interest, light, telephone and communications need to be paid
on time. These expenses need to be recorded and tracked accurately in order to come
up with reliable financial report and facilitate monitoring of trends. No scheduling
system for instructors and employees.What instructors, and other employees, should
be on duty at what hours are not defined. Same with schedule of classes, there is no
assigned time and venue for purposes of the different classes. The capacity utilization
is not properly identified to maximize space to revenue mix. There is also no cleaning
and maintenance schedule to be followed.
2. Relegate Kate Hoffman to permanent fitness instructor and hire a competent manager
to oversee the daily operations of Private Fitness LLC.
Kate Hoffman wasnt very helpful and trustworthy being a manager of the club. She
demonstrated this by pocketing money off the cash drawer and not remitting revenues
from her personal training callss with clients.
The new manager will be heavily involved in monitoring the activities of employees
and instructors including setting and defining specific duties and responsibilities of
each employee. He/she will also be responsible with the overall upkeep of the
facilities, making sure they are well maintained.
He/she shall also act as a marketing employee that will help generate more revenues
for Private Fitness LLC. She will be paid on fixed salaries plus 20% commission
based on monthly revenues.
3. a) Hire the services of an accountant to keep track on the business finances.
Accountant will address some core internal control issues facing Private Fitness LLC:
from revenue system to payroll and expenditure monitoring system.
b) Private Fitness LLC should invest on CCTV security system.
CCTV systems are widely used security infrastructure to mitigate varied risks from
theft to crimes to other petty issues within and outside the establishment.
c) Rosemary to personally supervise Private Fitness LLCs daily operation and keep
accounting records