Reference no: EM132976007
Case: While living in St. George, Jeff received a coupon in the mail for a minor car service for $99.95 at a local Econo-Lube. He thought $99.95 was a good deal so he decided to give Econo-Lube a try. When Jeff arrived at the Econo-Lube, the waiting room had approximately five people obviously waiting for their cars to be serviced. He went to the service counter and was greeted by the manager. Jeff explained that he would like to use his coupon for the $99.95 service. The manager acted very friendly and told him that the price of $99.95 did not actually include a $10.00 oil disposal fee. Also, the coupon was only good for small cars that required less oil so Jeff would have to purchase two more litres to meet the requirements of his car. So, the price would be $105.95. Next, Jeff asked for premium Valvoline oil because that was what his uncle, who repairs his own work vehicles, recommended he use in this car. The manager immediately told Jeff that the oil was not right and proceeded to tell Jeff all about his high-performance Porsche that he never runs using that oil. Jeff's Honda was not a Porsche, so he persisted. The manager finally agreed to use the requested oil on the condition that Jeff sign a liability waiver. Jeff also had to pay an extra dollar for each litre of Valvoline brand oil because Econo-Lube used a different brand. Jeff sat down next to a young-looking man named Rick who told him he was also in for the great deal on a minor service. As they talked, Jeff learned that this man was recently married and was planning to start university in the new year. The manager called Rick's name and invited him into the shop to review the "free diagnostic check" details Econo-Lube had performed on his car. Rick was with the manager about 5 minutes and came back ghostly white. Jeff asked him what was wrong. He explained that his car was in bad shape. In fact, he felt lucky it had not broken down yet. He was sick that the cost of repairs needed was going to be over $800. When Jeff asked if he was going to let the manager do the work he replied: "Do I really have a choice? My car is in bad shape." He had already given the OK.
After a while the manager called Jeff's name. He greeted Jeff gravely, asked him to come with him into his shop, and told him that his Honda needed some help. He then proceeded through a detailed checklist and showed Jeff everything that was wrong. Apparently, Jeff was lucky not to be dead because his brakes were on the brink of failing. Also, Jeff was told his transmission fluid needed to be drained and the filter replaced-for added effect the mechanic showed how he had opened the plug and saw that the fluid was black. There were also a lot of small "preventive maintenance items." The final item discussed with Jeff was that the 02 sensor needed to be replaced. Of course, Jeff did not know what an 02 sensor was so the manager explained it to him in detail. In the end Jeff's bill for the service was going to be over $600! The good news was that he could have it all done in a couple of hours. Jeff was tempted to have the extra work done, but politely declined and asked for the basic service. Later, Jeff drove the car to his uncle's house and went through a copy of the same checklist with him. About half of the small preventive maintenance items were legitimate things that the uncle recommended. The total of these items cost Jeff no more than $50. The expensive items listed (brakes, transmission filter replacement, 02 sensor) were in good shape and did not need to be replaced at all. In fact, because Jeff's car was a standard transmission, it did not even have a transmission filter. Jeff and his uncle checked the transmission fluid themselves and found it to be clean and clear. Jeff was upset that the owner of the shop would try to take advantage of him so badly but did not pursue the issue any further.
Questions:
(a) Did the manager of the Econo-Lube in St. George commit fraud? Explain.
(b) Suggests effective privacy issues and risk associated with such case. How such risks can be mitigated?
(c) Do you agree with any system deficiency in this case?
If Yes, then recommend appropriate changes
required for the effective accounting system.
If No, then justify the appropriateness of the accounting system.
(d) What would you advise Jeff for the further actions as his professional responsibilities?