ITARALDE, MARK DEAN

ACC535M MANAGEMENT ACCOUNTING

CASE 15-1 : PRIVATE
I.

Case Synpopsis

Private Fitness LLC is a small health club located in Rancho Palos Verdes, California,
an upscale community located in the Los Angeles Area. As business owner,
Rosemary Worth hired Kate Hoffman, one of the instructors and a long-time friend.
Kates primary tasks included marketing, facility upkeep, scheduling of
appointments, and record keeping. Eventually, She found out that Kate was stealing
from the club, and she realized that considering this stealing, she had operational
problems to addres.
II.

Problem Statement

What should be the procedures or controls that Rosemary could use to protect her
businesss assets?
III.

Action Plan

Rosemarys primary concern should be in establishing systems records that will

allow her to manage the business effectively, despite not being hands-on. So long
as these systems are in placed, she can actually be assured that no one is stealing
from her business.
Proper recording and on-time processing of all transactions can help her be at ease.
For starters, she needs to make that operations details are recorded.
The time
when employees and instructors reported for work can be determined by an
automated time-in and time-out recording. The same process may be used for the
use of facilities and equipment and scheduling of classes.
Costs must also be assigned for very action and movement. By assigning cost, it will
be easier to determine transactions and how it is affecting the business. It will also
be easier to monitor expenses particularly those fixed payables like utilities, rent
and even payroll of employees.
Accounts should also be reconciled and reported on a daily basis.
Logistically, installing CCTV cameras and even hidden cameras can also help.
At the end of the day, these systems are meant to establish check and balances in
her business operations.