Question

Recently, you had lunch with some friends at a new restaurant in your neighbourhood. The server entered his password into a computer and punched in your order. The server continued taking orders and you noticed the cook removing a small printout and placing it on the wall in front of him (presumably your order). When the food was ready, it was placed directly below your order. The server looked at the printout, put it in his pocket, and then brought your order to the table.
When you finished eating, the server again entered his password and printed two copies of your bill. One copy was attached to the order slip, and the second was brought to you. You decided to pay by credit card, so two copies of the credit card authorization were brought to the table for signature. You kept one and the signed copy was returned to the server.

a) What internal controls (manual, computer-assisted, and automated) are present at the restaurant?
b) How could the manager of the restaurant evaluate the effectiveness of the controls?
c) What are the costs and benefits of the restaurant’s controls?

Answer 1

Answer:-

a. Several internal controls present at the restaurant:

Password controls: the password ensures that only authorized individuals can access the ordering and sales system. It also ensures accountability (i.e., transactions can be tracked by server).

Segregation of duties: Servers do not have access to food production. When an order is placed in the computer system, the food order is printed in the production area (kitchen).

Matching and independent verification: The cook compares the printed food order to the actual food produced, and the server also compares the actual order to the food as he places it on the table. This helps ensure that only food that is ordered is produced, and that the correct order is taken to the correct customer.

Matching of payment slip to production slip: This helps ensure that all food that is ordered is billed.

Separation of cash recording from production: The cook cannot take cash. This helps ensure that all food prepared is billed.

Customers are provided with receipts: This helps prevent overbilling, as the customer compares the food ordered with the food received.

b. Totals of sales per the computer system would be compared to cash received (cash plus debit card plus credit card) to help ensure that all food produced is billed. This system also ensures that all cancellations (e.g., incorrect food orders) are recorded in the system, as presumably, corrections to orders would also need to be entered (and perhaps approved).

c. Costs would be the cost of the hardware and software, paper for the printouts, and the payroll costs of employees entering information. Benefits include an adequate audit trail, and accurate records.

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