Reference no: EM131518940

Question: As part of a consulting assignment you have been asked to review the appropriateness of a hotel's responsibility accounting system. In the course of conducting your review, you become aware of a degree of dissatisfaction felt by the head of the hotel's facility maintenance department. The facility maintenance department was established as a cost centre a number of years ago. In recent years the department has experienced problems containing costs within limits established by the budget. One particular area of concern to the head of the department is the cost of repairs to the hotel's three staff buses which have recently been involved in a series of minor accidents. Most of these accidents have been no more serious than bodywork dents resulting from reversing into one of the concrete pylons that surround the hotel car park's perimeter.

Consistent with repairs to most of the hotel's assets, bus repairs are managed by the facility maintenance department. In light of this, the cost of performing the repair work is charged to the facility maintenance department. It is generally accepted that this department contains the greatest expertise and local contacts to effectively oversee asset repairs. Three part-time employees are employed by the hotel to drive the staff buses. As their pick-up schedules are determined by the residential location of rostered staff, the drivers report to the head of personnel. This arrangement facilitates the flow of paperwork as the personnel department maintains staff roster records and also the database containing staff members' addresses. The head of the facility management cost centre has complained to you that he has asked the bus drivers to take more care when driving the buses. He believes, however, that the drivers take little notice of him as they feel primarily accountable to the head of personnel.