Tim Duggan owns and manages Sky Restaurant, a 24-hour restaurant near the city\'
ID: 2365345 • Letter: T
Question
Tim Duggan owns and manages Sky Restaurant, a 24-hour restaurant near the city's medical complex. Tim employs 9 full-time employees and 16 part-time employees. He pays all of the full-time employees by check, the amounts of which are determined by Tim's public accountant, Cheryl Williams. Tim pays all of his part-time employees in currency. He computes their wages and withdraws the cash directly from his cash register. Cheryl has repeatedly urged Tim to pay all employees by check. But as Tim has told his competitor and friend, Sara Hill, who owns the Sara's Diner, "First of all, my part-time employees prefer the currency over a check, and secondly I don't withhold or pay any taxes or workmen's compensation insurance on those wages because they go totally unrecorded and unnoticed." Required: 1. Who are the stakeholders in this situation? 2. What are the legal and ethical considerations regarding Tim's handling of payroll? 3. Cheryl is aware of Tim's method of payment of his part-time employees. What are her ethical responsibilities in this situation? 4. What internal control principle is being violatedExplanation / Answer
THIS COULD CAUSE SRIOUS ISSUES WHEN CAUGHT BY THE GOVERNMENT SINCE MONEY OR NON TAXED MONEY IS AGAINST THE GOVERNMENT... LEGAL ONSIDERATIONS ARE THAT HE IS PAYING THEM OFF RECORDS.. SO HE WOULD HAVE TO PAY THE TAX FOR THE PART TIME WORKERS WORKING IN HIS RESTAURENT....AND WHICH IS COMPLETELY ILLEGA.. BUT IT BENIFITS THE RESTAURENT AND THE PART TIME WORKERS BECUASE THEIR TAX WOULD BE EXEMPTED..!! SIMILARLY THIS CAN FIND ITS ETHICAL REASONS AT CERTAIN SITUATION THAT THIS CAN HELP HIM PILE UP SOME MONEY AND USE IT WWHEN IN NEED.. AND EVENTUALLY HE CAN ALSO INCREASE THE SALARIES OF THE PART TIME WORKERS WORKING IN HIS RESTAURENT..!!! the stake holders are obviously timduggan with his 9 full time employees..since only this is in regards...!! her ethical responsibity is to advice Tim duggan about what is the right thing to do... having a small amount of money is not more important than being taxed for 15 part time customers..... but for the SKYRESTAURENT to be safe... she should advice him to pay them by check....!!!