Robbing Peter to Pay ... Peter. Mary, a general manager for a major restaurant chain had heard rumors about one of her unit managers, Smith. Smith is her best manager, by any performance measure. His store has the highest sales volume and growth, positive customer feedback, excellent cost control, and consistently does well on inspections. In fact, Smith consistently is rated higher than the other restaurant managers of the chain's restaurants. Because of this, Smith is often mentioned as a candidate for promotion. Mary was concerned, however, about reports that Smith was taking in money from customers without bringing the sales into the cash register. As a result, she sent some friends to the restaurant a number of times, and a few of them reported back that the manager took their money, but, indeed, did not enter the payment into the register. In the meantime, Mary has also discovered that Smith did not seem to be pocketing the money himself but was using it as unrecorded payments to his crew as performance bonuses, overtime incentives, and off-hours cleaning wages. Though this was clearly in violation of the company's procedures, he was not actually taking the money out of the store for personal gain but was using it to achieve the high performance which had become his trademark On the other hand, because the funds are not accounted for as income, the extra "wages" to Smith's employees have no payroll taxes taken out. This means the company is at risk of a tax liability action by the government . Should Mary take action against Smith? Questions: 1. Write a case summary. 2. What are the key points that should be emphasized? 3. What measures should be taken? 4. Should Mary take action against Smith? Explain