Nicole Barth

Stephens CollegePrinciples of Management HW

You find out your accountant has been stealing money from the
company. You fire the accountant but find yourselves short of over
$1,000,000 and are having trouble making payroll and other account
payables. You have invoices past due.
Challenge #3: Accounting issues
In June of 2006, Baci conducted an investigation into the reason behind $1
million virtually disappearing from Bacis account international account. The healthful
Italian chain recognized the situation would have a significant impact on the employees,
some of who would lose their jobs because of the incident. Baci had to terminate the
accountant. In order to avoid a defamation claim by the accountant, all news releases and
press kits that were prepared for the media avoided the term theft, and instead addressed
the issue as both a violation of company policy and a cash handling violation.
Merely days after the accountant was terminated, the CEO held a press
conference at the New York City headquarters and informed the media of the following:
merely days after the accountant was terminated, the CEO contacted its legal counsel and
shareholders and determined it would initiate criminal proceedings. The advice of
counsel was sought in good faith, and it was given after full disclosure of the facts to the
attorney. This helped avoid claims of malicious prosecution by the accountant. Current
policies and procedures were reviewed regarding loss prevention. Employees were
informed that acts of dishonesty are serious infractions with dire consequences. Workers
were advised that if they knew of another employees dishonesty and failed to report it,
that they would be subjected to serious if not equal disciplinary actions. They were also
required to sign contracts/statements that made them realize the repercussions of
violating policies. A new policy was instituted that required extensive background checks
on all future accountants in order to assure the integrity of the applicant.
A week after the investigation began, Baci conducted an external audit of finances in
order to determine in precisely what state their assets were. They also conducted an
internal audit of finances in order to compare results and to reassure stakeholders of their
findings. Baci recognized the loss of $1 million would be an enormous detriment to
shareholder confidence and took measures to reassure them that the company was taking
measures to maximize their financial security. Baci took out a $3 million loan in order to
avoid terminating employees or closing franchises. Most of this money was used toward
marketing the chain as an honest company and to compensate the shareholders. It also
invested in the most advanced computer banking system that automatically handles and
files all expenses and money transfers within and out of the restaurant franchise. New
Yorks top IT manager was hired to program the software.
Finally, surveillance cameras were installed in all officestwo in the new
accountants officeand restaurant premises.