John Goodtime is the accountant for the XYZ Business Services Company. His company provides basic accounting and tax services to about 100 small business clients in the Coral Gables area of Miami, Florida. John’s duties include managing accounts receivable, accounts payable, payroll, and cash disbursements. He pretty much handles everything to do with accounting and payments. John’s boss, Marina Jefe, was playing golf with a partner from a local CPA firm, when an unusual conversation evolved.
“I hear that you have only John Goodtime doing all you’re accounting and financial work,” said the CPA.
“He’s great,” said Marina. “I never have to worry about anything. He does it all.”
“That’s crazy,” said the CPA. “You need separation of duties. You’re an accounting firm, and you have a guy in charge of your accounting that doesn’t even follow basic textbook segregation of duties.”
“But we’re making a lot of money. Things are going well,” said Marina.
“Get rid of him. He’s a walking time bomb,” said the CPA. “Take my professional opinion.”
Marina was terribly saddened after her golf game with the CPA. She liked John Goodtime and hated the thought of firing him, so she told him what the CPA said.
John responded that the CPA was “off his rocker.” He added, “Your CPA friend is used to working with large clients. We’re too small to have separate accounting and finance. Do you really want to pay a second person to do some of my work? You don’t have anyone else who can do it. All our staff members are overloaded already, and it would be even worse to let one of them handle both clients and billing.”
a. Who is right, John Goodtime or the CPA?
b. Should Marina consider firing John Goodtime?
c. Should she consider hiring another person? The money is there to hire someone else, but it would come out of the bottom line and her pocket.