MOUNTAINVIEW COUNTRY CLUB Essay Example
8MOUNTAINVIEW COUNTRY CLUB
Mountainview Country Club
Mountainview Country Club Analysis
Mountainview Country Club was among the best-ranked businesses in the Rocky Mountains primarily due to its amicable location and the way it had a combination of the fun activities as well as the luxury townhomes. The leaders are hands-off from the activities that go on in the club as far as management is concerned and has instead depended on the hired professionals to run everything in the club. Out of all the professionals, Sandi Lane seems to be the sane and professional accountant who has the objective of getting things to order as far as the accounting is concerned, but she is faced with ethical dilemmas in the end. The paper will analyze this case study taking different aspects into consideration like ethics, fraud, competitive environment, and various aspects of the business model.
Competitive Environment of the Company
The Mountainview Country Club belongs to the hospitality industry and has some competitors who are in the same industry as well. Some of these competitors include the Forest Glen Country Club, Briarwood Country Club, and the Rivers Catering. Sandi Lane had worked in all of these places as an accountant before. Although all of these companies are smaller as compared to the Mountainview Country Club, their accounting and management were at least in order as compared to the Mountainview management which puts Mountainview at risk in the long run if things remain the same.
Various success factors have resulted in the expansion and growth of the company the way it has. Among them is the location where it was located near the Rocky Mountains, and the visitors could view the mountain as they visit it. The club also incorporated some luxurious residential suites which then attracts a wider customer base. Its pricing was also different for various products and services including the residential homes in the club. These allowed the customers to obtain something that they needed at the prices that they were comfortable with. Utilizing the logo and the name of the well-known Mountainview University assisted them significantly when it comes to their branding and marketing. The association of the club with the Mountainview enabled them to enhance their residential sales and their overall sales at large.
Sandi Lane, who was the controller, after noticing various loopholes in the accounting operations, decided to take the necessary steps to incorporate sustainability measures into the system. Lane decided to confront the General Manager, Mr. Hughes regarding the same and although there was some resistance, she still went ahead to incorporate these sustainability measures. One of the resolutions was to record the approximated inventory losses which would update those who used the financial statements on these losses. Since Tate blamed the janitorial employees for the inconsistencies in the inventory, Lane did away with them to see if something would change in the inventory. She also had access controls policies change through changing the keys of the Pro Shop facility. Another measure was to install a surveillance system to monitor who was getting in and out of the shop. Finally, she recommended for a regular, genuine and thorough external audit of the firm. All of these measures were aimed at integrating sustainability into its operations, and the long run reduces the unnecessary losses that were being incurred by the club.
Challenge of Implementing Sustainability
One of the challenges was the fact that the Club did not have a precise method or metric that would assist them to account for the losses and costs that were being incurred. Lack of proper record keeping and accountability was the primary challenge facing sustainability practices in accounting (Bebbington, Unerman and O’Dwyer, 2014).
Core Competence of the Club
The core competencies of the club are those success factors discussed above which then add up as the strengths of the club as well.
Among the weaknesses of the Club is bad leadership. This starts right at the top who are the partners of the Club; they are hands-off and are in no way involved in the management of the club. Another challenge is that the club is not hiring professionals a good example being Tate-Hughes who is not a trained accountant. There is also a lot of partisanship and friendships which detrimentally affects the club’s processes. There are also some ethics and fraud concerns which are not treated as seriously as they should.
Sandi Lane has witnessed various ethical issues in the Club. One of them is the offering and accepting of kickbacks which jeopardize the integrity of all the employees. The tone and language used in the workplace are also not in check as people are abusing each other and treating each other anyhow. There is also a lot of favoritism and friendships that dominate and put ahead of the professional performance of the employees. Additionally, the people who are hired to work in the club are not qualified to perform some of the tasks that they are hired to perform; they are thereby connections and favoritism. The processes of integrity and evaluation are also interfered with like the external audit process because of fear of victimization.
Risks of Kickbacks
The risks include the weakened development and increased inefficiencies (Cole and Tran, 2011). When the external investors become aware of the corrupt activities that take place in the Country Club, they will shun being associated with the Club, and this might also happen with the clients. The customers of the club will not be willing to be associated with a club which is known for corruption which will, in turn, result in weakened development. On the other hand, there are high risks of inefficiencies because offering and accepting kickbacks means the inefficient use of resources (Cole and Tran, 2011). The resources of the club are at high risks of being used improperly which will then affect the efficient running of the business operations.
Fraud Triangle Model
This is a model which is utilized to evaluate the reasoning which is behind the decision of an employee to undertake fraudulent activities in the workplace (Kassem and Higson, 2012). At the Mountainview Country Club, there are various cases of these activities that have been witnessed by Lane. The first step of the model is to assess the pressure on the employee to commit the fraud (Kassem and Higson, 2012). Among the people who committed fraud was Alexis. The motivation behind her committing fraud was mainly greed because she did not have any financial problems per se but just wanted to misuse her status in the club.
The second step of the model is the evaluation of the opportunity to commit this fraud(Kassem and Higson, 2012) . In the Mountainview Club, there are numerous loopholes more so in the financial section which provided opportunities for fraud. There were no repercussions for these activities, lack of proper record keeping, and basically, nobody cared about what was going on, whether it was good or bad hence offering these numerous opportunities for committing fraud.
The third step of the model is rationalizing crime or fraud (Kassem and Higson, 2012). The fraudsters in the Club always had a justification as to why they committed the fraudulent activities that they did. For example, Alexis blamed the janitorial employees for the gaps in the inventory. Hughes kept on saying the club has always been the way it has so no need to worry. The partners, precisely Dawson, undertook these activities just because he was the boss. Therefore, all of these parties had their justifications of why they committed these crimes.
Ways of Detecting and Preventing Fraud
The first step of addressing the problem of fraud is by educating employees on the implications of fraud (Bolton and Hand, 2002). The management may embrace a policy where there is zero tolerance of such activities. They Club may also adopt an honest reporting mechanism and set rewards for honesty.
These internal controls of preventing fraud may be detective or preventive (Bierstaker, Brody, and Pacini, 2006). The preventive internal control will be stopping fraud or error from taking place while the detective controls will reveal the suspicious, erroneous, and inconsistencies in the club.
The physical controls will offer the necessary security measures which will present the physical barriers to getting access to these records and cash (Bolton and Hand, 2002). Doing this will bar any unauthorized persons from committing fraud, and it will make it easy to identify the fraudsters because of the limited access.
The outside auditors, as well as the committee of directors, are also to be blamed for what is happening in the club. This is because the auditors were not being thorough and honest in their audit and overlooked various financial loopholes. This is because they felt indebted to the club from the favors that the partners were giving them. Ignoring these loopholes year in year out supports the fraudsters to continue doing what they were doing. The board of directors also played a significant role in culminating a culture of unethical and fraudulent behaviors through taking part in them, and ignoring such concerns presented to them.
Sandi can choose to report Johnstone as well as the external auditors to the State Board of Public Accountancy. It is evident that partners and most of the employees are not knowledgeable about accounting although they were committing fraud in broad daylight. Therefore, it is the role of the external auditors and Johnstone as the CPA to highlight these issues and recommend appropriate measures for the Club. Although it would put Sandi in a bad situation with the GM and probably the partners, at least the Board can highlight to them that the external auditors and Johnstone are incompetent. This decision could either help Sandi in that the management could see exactly how much they are losing and appreciate her decision or make her lose her job for being a whistleblower.
Bebbington, J., Unerman, J & O’Dwyer, B 2014, Sustainability accounting and accountability, London, Routledge.
Bierstaker, J.L., Brody, R.G & Pacini, C 2006, Accountants’ perceptions regarding fraud detection and prevention methods. Managerial Auditing Journal, 21(5), pp.520-535.
Bolton, R.J. & Hand, D.J 2002, Statistical fraud detection: A review. Statistical science, pp.235-249.
Cole, S. and Tran, A 2011, 14 Evidence from the firm: a new approach to understanding corruption. International handbook on the economics of corruption, p.408.
Kassem, R. and Higson, A 2012, The new fraud triangle model. Journal of Emerging Trends in Economics and Management Sciences, 3(3), p.191.
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