Has the company imposed overly restrictive controls? Explain why or why not.

Please read Case Incident, then,
using The Short Essay Format, answer the 3 questions that follow the incident. Please use references where applicable. 1/2 page for each question.

“Mickey Mouse Controls”
Jean: Hey, John, I could sure use some help. We regional supervisors are caught in
the middle. What do you do about all this red tape we’re having to put up
with? The accounting department is all bothered about the way people are
padding their expenses and about the cost of luncheons and long-distance
calls. You know—their answer is nothing but more red tape.
John: Well, Jean, I don’t know. I’m feeling the heat too. Upper management wants us
to maintain our contacts with our brokers and try to get the money out in
loans. So we push the district supervisors to see our best contacts or at least
call them frequently. Yet lately, I’ve been having a heck of a time getting my
people reimbursed for their expenses. Now the accounting department is
kicking because we spend a few bucks taking someone to lunch or making a
few long-distance calls.
Jean: I really don’t know what to do, John. I’ll admit that some of my people tend
to charge the company for expenses that are for their personal entertainment.
But how can I tell whether they’re buttering up a broker or just living it up on
the company? The accounting department must have some receipts and
records to support expenses. Yet I think that getting a receipt from a parking
lot attendant is carrying this control stuff too far. As a matter of fact, the
other day, I caught a taxi at the airport and failed to get a receipt—I’ll bet I
have a hard time getting that money from the company even if I sign a
notarized affidavit.
John: Well, the way I handle those things is to charge the company more for tips than
I actually give—and you know they don’t require receipts for tips. I just don’t
know how to decide whether those reimbursement receipts that I sign for my
people are legitimate. If I call people up and ask about some items on a
reimbursement request, they act as though I’m making a charge of grand
larceny. So far, I’ve decided to sign whatever requests they turn in and leave the
accounting department to scream if it wants to. The trouble is that I don’t have
any guidelines as to what is reasonable.

Jean: Yeah, but I don’t want to ask questions about that because it would just
result in more controls! It isn’t up to me to be a policeman for the company.
The accounting department sits back looking at all those figures—it should
watch expenses. I ran into someone from the department the other day on
what she called an internal audit trip, and she told me that they aren’t in a
position to say whether a $40 lunch at a restaurant is necessary to sell a loan.
She said that the charge was made by one of my people and that I should
check it out! Am I a regional production person or am I an accountant? I’ve
got enough to do meeting my regional quota with my five district salespeople.
I can’t go snooping around to find out whether they’re taking advantage of
the company. They may get the idea that I don’t trust them, and I’ve always
heard that good business depends on trust. Besides, our department makes
the company more money than any other one. Why shouldn’t we be allowed
to spend a little of it?
John: Well, I say that the brass is getting hot about a relatively small problem. A
little fudging on an expense account isn’t going to break the company. I
learned the other day that the accounting department doesn’t require any
receipts from the securities department people. They just give them a per
diem for travel and let them spend it however they want to, just so long as
they don’t go over the allotted amount for the days that they’re on trips.
Jean: Now that sounds like a good idea. Why can’t we do that? It sure would make
my life easier. I don’t want to get a guilt complex about signing reimbursement
requests that may look a little out of line. Why should I call an employee on
the carpet for some small expense that may be the reason we got the deal?
Performance is our job, so why can’t the company leave us alone? They should
let us decide what it takes to make a deal. If we don’t produce the loans, we
should catch flak about something that’s important—not about these
trifling details.
John: Jean, I’ve got to run now. But honestly, if I were you, I wouldn’t worry about
these Mickey Mouse controls. I’m just going to do my job and fill in the form
in order to stay out of trouble on the details. It’s not worth getting upset
about.
Questions
1. Has the company imposed overly restrictive controls? Explain why or why not.
2. Do you think the company has a good conception of control tolerances? Why or why
not?
3. What should Jean do?


 

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