Robert Eberle owns and manages Robert’s Restaurant, a 24-hour restaurant near the city’s medical complex. Robert employs 9 full-time employees and 16…

Robert Eberle owns and manages Robert’s Restaurant, a 24-hour restaurant near the city’s medical complex. Robert 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 Robert’s public accountant, Anne Farr. Robert pays all of his part-time employees in currency. He computes their wages and withdraws the cash directly from his cash register.

Anne has repeatedly urged Robert to pay all employees by check. But as Robert has told his competitor and friend, Danny Gall, who owns the Greasy Diner, “My part-time employees prefer the currency over a check. Also, I don’t withhold or pay any taxes or worker’s compensation insurance on those cash wages because they go totally unrecorded and unnoticed.”

  1. Who are the stakeholders in this situation?
  2. What are the legal and ethical considerations regarding Robert’s handling of his payroll?
  3. Anne Farr is aware of Robert’s payment of the part-time payroll in currency. What are her ethical responsibilities in this case?
  4. What internal control principle(s) is (are) violated in this payroll process?

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