Atlanta Home Loan

Mr. Firorini has requested a thorough analysis on the events that took place with Atlanta Home Loan in order to avoid these circumstances with his next business. Atlanta Home Loan suffered major failures in key controls. Atlanta Home Loan would still be operating if Mr. Firorini had strict action, personnel and cultural controls put in place.

Atlanta Home Loan (AHL) did have controls in place both before and after Mr.Firoini went to California. Mr.Fiorini implemented results controls in the telemarketing department. Telemarketers received compensation for each new lead obtained. Result controls were implemented with the loan officers. Loan officers received 40% of total loan revenue from their applications processed when the leads were generated by AHL, and 60% if the loan officer generated the leads on their own.

The office manger Leitia was responsible for cheque security which is an action control. Leitia was instructed not to hand cheques to Wilbur without his consent. Leitia was instructed to contact Mr.Firorini in the event a cheque need to be issued. This control permitted Wilbur from signing authority.

Mr.Firoini had action controls of segregating duties across the sales process. Telemarketers made cold calls to generate leads, leads were then forwarded to Mr.Fiorini, (Wilbur took on these duties when Mr.Fiorini was in California) Mr. Fiorini then forwarded leads to loan officers, if a sale was made, loan officers forwarded the application on to loan processors in order to have credit reference checks processed.

Mr.Fiorini monitored the activates of his loan officers by tracking the number of credit inquiries each requested and monitored the loan application/lead ratio depending on the skill of the loan officer. These action controls were implemented before and after school was attended.

AHL employees seemed very content with their working environments. Employees were allowed to work from home to avoid the hectic Atlanta traffic. This cultural control was put in place by Mr.Firorini. Mr.Fiorini had the responsibility of hiring all employees and once he left to California this personnel control was passed on to Wilbur.

While attending school Mr.Fiorini spent several hours daily speaking to the staff at AHL. This cultural control was put in place to monitor the emotional states of the employees at AHL.

AHL's company strategy to promote goal congruence remained, the failure to AHL was due to the fact that Mr.Fiorini's controls failed. The action, personnel and cultural controls implemented by Mr.Fiorini failed and were not spotted in a timely manner to resurrect AHL.

Mr.Fiorini trusted Leitia with the cheque security. Leitia was loyal to Mr.Fiorini, however, Leitia began to court Wilbur. Leitia trusted Wilbur with AHL's pre-signed cheques. Wilbur then took fraudulent activity into his hands and tried to deposit funds into his account. This is a failure to an action control.

The cultural control of allowing employees to work from home may have prevented Leitia forwarding the cheques to Wilbur. Mr.Fiorini kept in touch with loan officers, however, since these loan officers did not have to attend the office, the courting of Wilbur and Leitia went un noticed. If these control required loan officers to work out of the office, the courting may have been reported to Mr.Fiorini, leaving him time to make the necessary changes.

The personnel controls implemented seemed to fail from the start. Mr.Fiorini did not hire the right personnel to take over his position. Mr.Fiorini failed with hiring Joe and falied with hiring Wilbur, whom was introduced from Joe.

The results controls implemented by Mr.Fiorini seemed to be working with the telemarketers and loan officers. Telemarketers continued to provide leads and loan officers continued to process applications. Mr.Fiorini sent a letter to over hundred clients that their applications in process needed to dropped. This was evidence that the results control was working, as sales were being generated.

Mr.Fiorini has expressed interested in starting up another company. Mr.Fiorini will need to avoid employee theft. The ability of having Leitia access to blank cheques and refusing Wilbur signing authority generated a conflict.

Mr.Fiorini did have trust with Leitia, however if the following alternatives were followed:

1. tighter results controls

2. tighter action controls

3. tighter personnel/cultural controls

AHL would still be in operation today.

Tighter results controls would include to set specific performance targets for all management staff and effectively communicating the organization objectives to provide a higher degree of assurance targets will be achieved. Targets set on short-term and long-term growth. Long-term growth targets will keep managers in line to act ethically to achieve the organizations objectives.

Tighter action controls with behavioral constraints such as computer passwords on all computers. All confidential documents saved on company computer hard drives and not ever placed on flash drives. Company cheques should be locked in drawer, in a locked office, with a cheque log book of whom opens the drawer. Physical locked building doors with magnetic identification card readers to grant access to the building.

Preaction reviews such as allowing the office manager with a minimum purchase requisition amount. Anything above a pre-determined amount will need upper managements authority to approve the expenditure.

Tighter personnel/cultural controls recommend all employees understand the code of conduct published by the organization. The organization will need to communicate the code of conduct through employee handbooks and procedure manuals. The recruiting process will include new hires to sign a copy of the code of conducts before commencing work. Policy and procedure manuals are an effective way of training new hires. Updates to the code of conducts will need to be delivered and signed by all employees when they are updated.

Group rewards can be put in place. Group rewards promotes goal congruence. Providing incentives based on overall results encourages cultural control.

To prevent the occurrences that happened in AHL, Mr.Fiorini would need to set controls to ensure all employees act ethically. Employees acting ethically will enhance the organizations goal to increase profits.

Implementing tighter results controls within management. In the AHL