[SOLVED] In 1983, Marta Giordano inherited the restaurant

In 1983, Marta Giordano inherited the restaurant that her grandfather, Alberto Buranello, had established shortly after returning to his hometown of Boston after serving in World War I. 1 For nearly a century, the restaurant, Buranello’s Ristorante, has been a landmark and favorite gathering spot for generations of families in Boston’s historic North End neighborhood. Over the years, the large corner restaurant, which has a staff of approximately 40 employees, has been essentially recession-proof. But Giordano’s business recently faced two major challenges. Three local, formerly family-owned restaurants that Giordano considers to be her primary competitors were purchased by private investors who then renovated their interiors and facades and refurbished their kitchens. Although Buranello’s breakfast and lunchtime traffic were largely unaffected by the competitors’ upgrades, its dinner traffic fell by 20 percent. Making matters worse for Giordano during this same time span was another problem that was plaguing the restaurant, namely, abnormally large cash shortages apparently resulting from employee theft. These shortages were typically discovered at the close of business when the daily sales reconciliation worksheet was prepared.
The Suspect
Michael Barnes, Buranello’s general manager, was just as frustrated by the cash shortages as his boss, Marta Giordano. Barnes had worked at Buranello’s for more than 20 years and was practically a member of the Giordano family. His first position with the restaurant was as a busboy when he was 14 years old. During college he worked as a waiter at the restaurant. When he graduated from Northeastern University with a management degree, Barnes turned down an offer from Giordano to become a member of Buranello’s management staff, choosing instead to work for a large, nationally franchised restaurant chain that had an extensive management trainee program. Five years later, though, Barnes returned to Buranello’s when Giordano offered him the position of general manager.Barnes eventually called a meeting of the restaurant’s management staff—himself, three shift managers, three assistant managers, and the chef—to address the cash shortages being experienced by Buranello’s. At the meeting, which Giordano also attended, Barnes informed his subordinates that the cash shortages were becoming larger and more frequent. He pledged that he would catch the culprit or culprits and prosecute them to the fullest extent of the law. Barnes did not discuss specific measures that he planned to take to determine the source of the cash shortages. Why? Because he suspected that the thief was a member of the management staff. The prime suspect in Barnes’ mind was Aaron O’Neil, one of the three shift managers.
Barnes rotates the work assignments for the shift managers so that each of them works the closing shift, which is 3 p.m. to 11 p.m., only twice per week. 2 Buranello’s is closed onSundays when it often hosts private parties such as family reunions and wedding receptions. One of the responsibilities of the shift manager at closing is to prepare the daily sales reconciliation. To perform this task the shift manager completes one of the……………………

1. Identify internal control weaknesses evident in Buranello’s operations. What risks are posed by these internal control problems?
2. For each internal control weakness you listed in responding to the previous question, identify a measure that Buranello’s could implement to remedy that weakness. Indicate whether these measures would be cost-effective.
3. Prepare a list of internal control procedures for a restaurant other than the controls referred to in this case. For each control that you list, identify its underlying objective.
4. Do you believe that Barnes’ plan to test Aaron O’Neil’s honesty was appropriate? Was it ethical? What ethical responsibilities does a business’s senior management or owner have when an employee is suspected of theft?

Question: In 1983, Marta Giordano inherited the restaurant