Henri is the owner of the “Chez Henri” Restaurant. It is not a large restaurant (78 seats). For this reason, it does not have many people on the payroll. Henri has been handling the general manager’s responsibilities and has a good friend working half a day, five days a week, to take care of such matters as bank deposits, preparing accounts payable and payroll checks, and all other routine office and bookkeeping work.

Henri is not concerned about the honesty of the person, but he has learned from courses he has taken that any company, however small, needs to have some internal controls.

REQUIRED

1. Write a short report to Henri pointing out three specific areas where you believe controls might need to be implemented. For each of the three areas, advise Henri what might happen if a dishonest bookkeeper was hired and how internal control can be implemented to prevent dishonesty.
2. Henri would like to prepare the coming year restaurant budget himself. Please, help Henri understand the advantages of a flexible budget giving him some real-life practical examples.