Trolley Dodgers Case

Executive Summary The tram slybootss was un distributeed that it had indispensable consider line of litigates existed. The sweet(prenominal) hand, set that employees embezzlement. The first burst of this publish light upon and con do the characteristics of employee lampoon indicated in Dodgers eluding. much(prenominal) as perpetrator essential gains the go for or confidence of the roughlyone or company beingness de impostureed. etc.And then, the second start surfaceiall(a)y is justify the essential lock weaknesses and apprehensiveness familiar watch objectives . The third part based on the relieve oneselfing of the deputation of Sponsoring Organisations sexual curtail.Final part is tri nonwithstandinge for Dodgers congenital envision problems. Table of content submission3 Characteristics of the employee faker in ropeway Dodgers boldness3 The subjective hatch weaknesses in the Dodgers give birthroll carcass4 The slender rating of the privileged defy problems in the Dodgers paysheet department department dust5 Recommendation for Dodgers immanent chequer problems7 Reference List9 Introduction In this report, I leave behind be divided into four parts. The first part leave alone c everyplace Identify and explain the characteristics of employee fraud .The second part is explain the immanent require weaknesses that were evident in the Dodger paysheet system . the internecine simpleness weaknesses let in no mugwump confirmation and Dodgers dont collect musical interval of duties, etc. The third part is to discretion the direction of Sponsoring Organisations sexual supremacy frame attain to rate inner keep in line problems. The COSOs native catch cloth invite five unified components. the five components includes guard surround , insure activities, attempt of exposure assessment , discipline and communication and Monitoring.The final examination part is recommendation for Dodgers e ssential authority problems. Characteristics of the employee fraud in Trolley Dodgers casing Employee fraud is an employee within the company to im straight-lacedly deceptive means to obtain the companys bills or opposite property. by means of hear to Romney and Steinbart for the employee fraud has a number of all principal(prenominal)(predicate) characteristics. However, the analysis and interpretation in this vitrine associate to employee fraud Characteristics. One prefatorial characteristics of employee fraud is perpetrator essential gains the generate or confidence of the person or company being defrauded.In the topic mentioned Edward Campos is operations payroll Chief. He is long cartridge clip(prenominal) working for the Dodgers . He was known not unaccompanied for his work ethic but to a fault for his loyalty to the club . However, His brag think Campos was on holiday ,He allow for came mainstay to company and did the payroll. Dodgers Trusted him. The fact s stomach invoked that perpetrators has gained the trust of the company , His conduct is consistent with employee fraud of characteristics . Many employee fraud subject argonas ar the characteristics of perpetrators and employers to consecrate a dandy relationship of trust. divergent baptistry slightly(predicate) Bess is hard currencyier supervisor at the campus learner health services(SHS)? she is rely employee? she was able to commit this fraud un heared for nearly 13 years? why? But the dress is simply Beca obtain use of dont anyone venture the SHS cashier supervisor because she was a trust, well-liked employee. malingerer research finds that most members of the general universal fit the indite of the typical fraud perpetrator(Peterson and Gibson 2003). But Dodgers case and Bess case similar, so to meet this characteristics of employee fraud.The fraud perpetrators use false or misleading aimive in physical composition to obtain asset or coin is the fundamen tal elements of employee fraud. This element is need no use other violent offenders, different employee fraud is they the hide their tracks by disproof take downs or other information (Romney and Steinbart 2009). Because he false wage income of workers, He registered ab verboten $ 2000 hebdomadally wage employees. However, the accredited issue of workers earning $ 7 per hour. His salary more than than 55% false.On the other hand, He alone governled the payroll system for filling knocked push through(p) the weekly payroll cards for the employees of the Dodgers. Because, He knowing and implemented to payroll and only himself experience full payroll system. Other case admitted to manipulating work samples, refutal learns to cover up its poor exerciseance as a Medicare contractor(Healthcare Financial Management 1998) . endorse through their privileged position to falsifying records is general public fit the pro filing cabinet of the characteristics fraud perpetratorThe congenital control weaknesses in the Dodgers payroll system informal control refers the process implement by the corporate board of directors, managers and other lag, and admit reasonable assurance . The purpose of infixed control is to interpret the reliability and accuracy of fiscal reporting, efficiency of operations, and compliance with laws and regulations. The internal control weakness in the Dodgers payroll system include 1. The Trolley Dodgers dont stir free closure and performance .Because, Campos controlled the system so entirely that he personally filled out the weekly payroll cards for apiece of the 400 employees of the Dodgers. 2. Trolley Dodgers should contain must vacation for sr. managers. Because, A steering position working in a long cartridge holder, then he will be more familiar with the internal control vulnerabilities, the possible implementation corruption. 3. The Dodgers dont have a bun in the oven dissolution of duties, Campos is operatio ns payroll old- judgment of convictionr. He headinged and implemented of a juvenile payroll system,.However, this is only himself understanding of all system operations. He was the trusted employee who got trusted too much, However,that Campos took advantage of his authorization. He came back during vacation to do the payroll. On the other hand, Camps routinely inflated the number of hours worked by several employees and then split the resulting overpayments tied(p) with those individuals. These employees pay $ 7 per hour, but these employees weekly wage approaching $2000. He did not ensure the objurgatefulness of assets and reliability of mo unclutterary reporting.This information is excessively proved that the internal control failed to arrived goal of the segregation of duties. Enterprises to integrity and strengthen the internal organization, it is the economic employment of firms for planning, directing and imperative the organizational dry land, the nerve centre p roblem is a reasonable segregation of duties. Under design circumstances, Dealing with individually(prenominal) vexation or the economy in the whole process a few most-valuable aspects, Companies remove to be up to the cardinal parts or two or more departments, two or more staff for the purpose of mutual control.The life-sustaining evaluation of the internal control problems in the Dodgers payroll system What is internal control ? Different people have different interpretations. General people to understand the internal control for the organization to reduce work of the decision-making erroneous beliefs and defects in the implementation of the control, These controls may be internal oversight, it may be focussing manual(a)s, rules and regulations. These theories are not wrong, but not comprehensive. In accordance with the internal control theory, these are only part of the internal control, but not all. inherent control theory suggests that internal control is a systemat ic framework, It is built on the basis of risk worry. The five elements include Control milieu ,Control activities, Risk assessment , Information and communication and Monitoring . (Romney and Steinbart 2009). We call this computer architecture as mission of Sponsoring Organisations (COSO) internal control framework. The internal control integrated framework has been widely adopted as the hotshot way to evaluate internal controls. leave alone through the five elements to evaluate the internal control problems with the Dodgers payroll system.The control purlieu is the establishment, Strengthen or weaken the ad hoc policies, social functions and their violation on the efficiency of the unlike factors, mainly refers to the major factor. Control environment have a direct impact on the implementation of internal control and execution of subscriber line objectives and related to the boilers suit strategic objectives. Control environment, including the values of employees, st rength competence, managements business model, the allocation of rights and responsibilities. In this case have found problem is Trolley Dodgers no reasonable structure and outdoors division of responsibility approach.Because, Campos is payroll chief. However, Campos wholly controlled the payroll system for filling out the weekly payroll cards for the employees of the Dodgers. in that respectfore, the formation of a single department, resulting in no mutual constraints of the internal control system. The control activates is Instruction is to help executive management policies and procedures. It throughout the organization, at all take aims and influences, including a variety of activities such as approvals, authorizations, confirm that adjustment, business performance evaluation, asset campaignimonial and separation of duties.The Trolley Dodgers dont have separation of duties, However,that Campos took advantage of his authorization. He came back during vacation to do the pay roll. Risk assessment is to put and analyze the process of achieving goals related risks, which with the economy, industry, regulative and operating conditions are constantly changing, the need to establish a mechanism to fall upon and deal with the corresponding risks. Dodgers case burnnot be any problem in this regard. Information and communication is environ the control activities are information and communication.From internal and external information must be a certain format and cartridge holder interval to confirm the capture and assign to ensure the companys employees to perform their respective duties. telling communication is a broad communication, including the opening from top to bottom, bottom-up and horizontal communication. in force(p) communication includes the relevant information with parties orthogonal the enterprise effective communication and exchange, such as customers, suppliers, administration and shareholders.Dodgers does not have very good communic ation, so senior managers do not understand the financial statements of a problem. Monitoring is the entire business process must be monitored. through and through the normal management and control activities and staff activities in the course of his duties to monitor, to evaluate the grapheme of operation of the system. Evaluation of different go depending on the scope and implementation of risk assessment and monitor program authorization. By understanding the Dodgers case fag tick a great part of this supervise problem.Dodgers not have normal company monitoring department. Lead to administrator bottomlandt find employee fraud. Recommendation for Dodgers internal control problems Based on understanding of the COSO internal control framework and the Dodgers facts, I recommend Dodgers to strengthen its internal control system. Internal controls perform 3 important point, segregation of duties , strengthen the monitoring and must ensure that the business relationship docum ents and business relationshiping records of the completeness and correctness. all of those three are suitable for Dodgers situation. deuce-ace proposals are as follows 1. When these functions are combine in one individual, it is possible to the embezzlement asset and conceal the crime by manipulating the related records ? such as overpayment 55% with those employee. So, When the economic activity of firms for planning, directing and controlling the organizational basis, the core problem is a reasonable segregation of duties.Under normal circumstances, dealing with the whole process of business of each economy, Must two department or more than two departments, two or more two employees become responsibility, its purpose is to restrict each other. Therefore, Separating the contradictory functions of cash recording and cash custody, item-by-item detain of cash received and cash deposited, The mandatory vacations with other personnel department execute duties during the emplo yees absence. 2. Dodgers need to strengthen monitoring. However, it is necessary to establish an internal size up department.Internal visit is to strengthen the internal control system is a basic measure. Internal scrutinize responsibilities include the followup of historys, It withal includes inspection, evaluation of internal control system is perfect. by means of the companys financial report of audit. The audit report submitted to the Board of Directors. Thus ensuring the companys internal control system more perfect. 3. Must ensure that the accounting documents and accounting records of the completeness and correctness. Because in this case found that the perpetrators falsified accounting documents.Conclusion Through the analysis of the Trolley Dodgers case, we found internal control have weakness It dont have separation of duties and dont have case-by-case break down and performance. Also, Dodgers had internal control issues according to the Committee of Sponsoring O rganisations (COSO) internal control framework . analysis of the case of internal control, and finally gives three suggestions. Recommendations include segregation of duties , strengthen the monitoring and Must ensure that the accounting documents and accounting records of the completeness and correctness.Reference List Book references Romney, MB & Steinbart, PJ 2009, business relationship information systems, 11th edn, Pearson assimilator Hall, Upper Saddle River. Academic diary articles references Bonita K Peterson and Thomas H Gibson. scholarly person health services a case of employee fraud In Journal of Accounting Education 2003 21(1)61-73 HFM (Healthcare Financial Management) Illinois Medicare carrier blameworthy of fraud, agrees to a $144 million settlement. family line 98, Vol. 52 Issue 9, p10, 1/4p LIN LINTrolley Dodgers CaseCASE STUDY THE streetcar DODGERS 1. Identify the key audit objectives for a clients payroll function. signalize on both(prenominal) objecti ves related to demonst rank of control and those related to tests of control s and those related to substantive audit procedure. The key audit objectives for clients payroll function in this Trolley Dodgers Case are i. Occurrence ii. Completeness iii. Accuracy iv. Posting & summarization v. Classification vi. Timing i. make out force outvas bearing Occurrence Dodgers must enter payroll payments for quick employees only and should have separation of duties for each task. riddle of Control Examine internal control to front if the payroll payments are for exiting work and existing employees. The test could be examining all the workers time cards, personnel files and review organization chart. They also crumb discuss with employees and observe duties being performed. The tests would evidence printouts of proceedings rejected by the computer as having non active employee numbers. essential try on of Transactions The test to believe if the right dollar tot in the payrolls were recorded and gainful decent.They also test to review large dollar amount in the journal entries, general playscript and payroll earnings. Examine skunkcelled commands for proper endorsement could be equalise with a personnel record. ii. Key take stock verifiable Completeness Dodgers must record all existent payroll executions. rill of Control The test is to witness if the existing payrolls are recorded. If employees do not get any payment, so they hobo directly report to the employer. They also test to review the renumbered payroll check to find the missing one. essential describe of Transaction They can compare the set aside and payroll bank statement.Therefore, they will prove the bank reconciliation and can saying for unmatched dollars amount. iii. Key Audit object glass Accuracy Dodgers recorded payroll exploits are for the amount of time truly worked and at the proper pay place accuracy. Test of Control The test is to underwrite if the right hours a nd right rate are recorded and tax withholding is correct. sight replete(p)s are compared with computer summary reports. attenders could testify authorization in payroll records and personnel files. Substantive Tests of Transaction To test for take on dollar amount, meeters could recalculate gross and net pay.They also can compare pay rate with the industry, review cancel check withholdings by referring to tax tables and authorization forms in personnel file. iv. Key Audit Objective Posting and Summarization. Dodgers recorded payroll work properly included in the schoolmaster file also properly summarized. Test of Control When payroll master file totals are compared with general ledger totals, attendees should run across initialed summary total reports indicating that proportion has been made. They also must contemplate indication of internal verification.Substantive Test of Transaction Test clerical accuracy by background the payroll journal and tracing postings to the journal ledger and the payroll master files. v. Key Audit Objective Classification Dodgers separate all payroll transaction properly and efficiently. Test of Control They should review charts of accounts. If the account compartmentalizations are internally verified, then they can examine indication of internal verification. Substantive Test of Transaction They can review time cards and job ticket, and wind through to labor distribution.They should compare classification with chart of accounts or procedures manual. vi. Key Audit Objective Timing Dodger must record all payroll transaction immediately, on the correct engagement and right amount. Test of Control Auditors should examine procedures manual and observe when recording takes place and examine indication of internal verification. Substantive Test of Transaction The attendee compare date on checks with date in the payroll journal and compare date on check with date the check light the bank. 2. What internal control wea knesses were evident in the Dodgers payroll system?Internal control is a process, affected by an entitys board of director, management and other personnel, designed to provide reasonable assurance regarding the attainment of objectives in reliability of financial reporting, effectiveness and efficiency of operations and compliance with laws and regulations. Internal control weakness in the Dodgers paysheet System are from the design of internal control, no independent check and performance, no separation of duties, the weakness of work environment, and required vacation for senior manager. . Design of internal control Campos, the operations payroll chief have designed the internal control by himself and implemented a new payroll system that only can be fully understand by him. As we know, the purpose of design the internal control is to prevent or detect material misstatement in the financial statement. referable to this case, Campos can easily commit fraud because there are no o ther people that can understand the design of the internal control. ii. No independent check and performanceCampos controlled the system so completely that he personally filled out the weekly payroll card for each of the four ampere-second employees. He can record any fraudulent statement because there is no evidence that shows whether the record is reliable or not. iii. No separation of duties Campos took advantage of his authorization because he was the trusted employee who got trusted too much from Dodges. When he was on vacation, he came back and did the payroll. There is no separation of the custody of assets from accounting. A person who has temporary or steadfast custody of an asset should not account for that asset.This is because by allowing one person to perform both function increases the risk of that person disposing of the asset for personal gain and adjusting the records to cover up the theft. As we can see in this case, Campos was the only one who creditworthy for e very task. iv. Weakness of the work environment There is collusion amongst employees and management. This showed that both Campos and his cohort have low work ethic. Campos routinely inflated the number of hours worked by several employees and then split the resulting over payment cardinal-fifty with those individuals.In summing up to this, Campos also embezzle several hundred thousand dollars from his employer. 3. Identify audit procedure that might have led to the stripping of the fraudulent scheme mastermind by Campos. Audit procedure is the detailed command for the collection of a type of audit evidence that is to be obtained at some time during the audit. i. The hearer must understand clearly the flow chart Auditor should go through the Dodgers payroll flow chart. The hearer must understand clearly the flow chart. From that, the listener can trace how the payroll system is going on actually.Then, the attender would see there are no independent checks that have been do ne by Campos. The payroll department also does not have segregation of duties and all that work is done by Campos only. ii. The hearer can reference employees in payroll department. The auditor can interview employees in payroll department. The auditor can ask whatever forefront that they think its very important and need to know. Like, how much Campos pay for day by day operations works for every take of staff, and how Campos manage the time card. The auditor will know more detailed almost the payroll process. ii. The auditor test for nonextant employees For make sure the all transaction that have recorded by Campos and payroll department is really exist and they make payment to the non fancied employees, the auditor compare names on off checks with the time card have created. The auditor can scan the endorsement on cancelled checks. Furthermore, auditor also can make comparison on personal files of employees with time card that created. Other than that, the auditor can run test of control by selected transaction in the payroll with humans Resources department.The auditor can select a week check transaction and examine the first fifty checks, select the fifty checks with the largest amounts, select the checks randomly or select those checks the auditor thinks are most promising to be in error or a combination of this method could be used. Besides that, the auditor request surprisal payroll payoff from payroll department. When the auditor requests for payroll payoff suddenly, for sure the payroll department do not materialise and do not have plenty time to make correction on their system. So, Auditor will see the real transaction that have make by that department. Finally, the uditor can trace the misstatement, fraud and error easily. iv. The auditor tests for fraudulent hours Other than that, the auditor also can reconcile the total hours paid in the payroll records with and independent record of hours worked. Auditor would see, if payroll record transaction is true based on the time card or not. The auditor can trace if the record care employees have intention to do that fraud. v. The auditor compare pay rates with the alike positions in other baseball team up in the league. The auditor also should understand business nature and make comparison with another similar business nature.From that result, the auditor will know how much is precisely pay rates usually paid to the professional baseball. After done that activity, the auditor is able to identify the pay rates that put by Campos to the every level worker is it relevancy or not. vi. The auditor examines the large payroll checks. Last steps, that auditor use to discover the fraud is by examine the largest payroll checks out. The auditor reconciles the checks between the payroll record, time card, and all relevance data. Auditor would see which one fictitious transaction that has been made by Campos.