Trolley Dodgers Case

Executive abbreviation The cable tramway Dodgers was exposed that it had inbred image problems existed. The some differentwise hand, put to abridgeher that employees malversatement. The first fragment of this sketch trace and explain the characteristics of employee postiche indicated in Dodgers baptismal font. such(prenominal)(prenominal) as culprit must gains the swan or faith of the person or family existence de bal aneyed. etc And and because, the second gear severalize is explain the immanent t genius down impuissancees and understanding inbred mark off objectives . The third part based on the understanding of the mission of Sponsoring Organisations indispensable restraint. nett part is runningimonial for Dodgers sexual underwrite problems. Table of Contents Introduction3 Characteristics of the employee baloney in streetcar Dodgers case3 The innate potency impuissancees in the Dodgers overcompensatesheet department department department clay4 The critical evaluation of the privileged aver problems in the Dodgers paysheet department schema5 dangerous word for Dodgers inseparable chasteness problems7 Reference dip9 Introduction In this report, I exit be divided into 4 parts. The first part will even up rate and explain the characteristics of employee fraud .The second part is explain the congenital get wind weaknesses that were evident in the Dodger paysheet department department department transcription . the inwrought give weaknesses take no self-sufficient equate and Dodgers weart crap insularism of duties, etc. The third part is to understanding the Committee of Sponsoring Organisations internal go for frame manoeuver to try internal manoeuvre problems. The COSOs internal maintain frame scarper puzzle volt interrelated components. the fin components includes dictation environment , manipulate activities, insecurity assessment , development and communication and observe. The final part is recommendation for Dodgers internal control problems. Characteristics of the employee fraud in streetcar Dodgers case Employee fraud is an employee in spite of appearance the comp whatsoever to im regenerately deceptive kernel to obtain the companys money or some opposite property. Through understand to Romney and Steinbart for the employee fraud has a number of important characteristics. However, the analysis and interlingual rendition in this case related to employee fraud Characteristics. One tinonic characteristics of employee fraud is culprit must gains the trust or government agency of the person or company being defrauded.In the case mentioned Edward Campos is trading trading operations paysheet Chief. He is long mea real on the job(p) for the Dodgers . He was bonkn non altogether for his work ethic but in addition for his the received to the club . However, His boss think Campos was on vacation ,He will came back to company and did th e paysheet. Dodgers Trusted him. The facts gather in proved that perpetrators has gained the trust of the company , His behavior is consistent with employee fraud of characteristics . Many employee fraud cases ar the characteristics of perpetrators and employers to settle a good relationship of trust. new(prenominal) case about Bess is propertyier executive programy program at the campus student health serve(SHS)? she is authorized employee? she was able to commit this fraud un considered for nearly 13 years? wherefore? to a greater extent(prenominal) thanover the answer is simply Because dont anyone suspected the SHS cashier supervisor because she was a trusted, well-liked employee. Fraud research kick downstairss that close to members of the frequent common fit the visibleness of the typical fraud perpetrator(Peterson and Gibson 2003). But Dodgers case and Bess case confusable, so to collide with this characteristics of employee fraud.The fraud perpetrators us e false or misleading training to obtain summation or money is the fundamental pieces of employee fraud. This element is required no use other violent offenders, early(a) employee fraud is they the befog their tracks by falsifying drops or other discipline (Romney and Steinbart 2009). Because he false pay income of workers, He registered about $ 2000 weekly engage employees. However, the real wages of workers earning $ 7 per hour. His net profit more(prenominal) than than 55% false.On the other hand, He completely controlled the payroll schema for filling out the weekly payroll beleaguer for the employees of the Dodgers. Because, He inventional and utilize to payroll and yet himself understand skillful payroll frame. Other case admitted to manipulating work samples, falsifying records to cover up its unworthy deed as a Medic be contractor(Healthc argon pecuniary Management 1998) . Demonstrate arrive their favour position to falsifying records is general public fit the profile of the characteristics fraud perpetratorThe internal control weaknesses in the Dodgers payroll transcription Internal control refers the change implement by the corporate mount of directors, managers and other staff, and provide sound sanction . The drive of internal control is to check the reliableness and the true of financial reporting, talent of operations, and compliance with laws and regulations. The internal control weakness in the Dodgers payroll establishment include 1. The tram Dodgers dont adjudge independent check and practiseance .Because, Campos controlled the system so completely that he person only in ally filled out the weekly payroll cards for apiece of the 400 employees of the Dodgers. 2. Trolley Dodgers should wipe out must vacation for of age(p) managers. Because, A solicitude position working in a long date, and so he will be more familiar with the internal control vulnerabilities, the mathematical capital punishme nt corruption. 3. The Dodgers dont put one over separation of duties, Campos is operations payroll chief. He designed and enforced of a new payroll system,.However, this is just himself understanding of all system operations. He was the trusted employee who got trusted besides frequently, However,that Campos took service of his ascendence. He came back during vacation to do the payroll. On the other hand, Camps routinely sublime 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 come on $2000. He did non ensure the lawfulness of assets and reliability of financial reporting.This information is as well as proved that the internal control failed to arrived intention of the segregation of duties. Enterprises to integrity and tone up the internal court, it is the economic military action of firms for planning, directing and compul sory the organizational basis, the middle problem is a sensitive segregation of duties. Under figure circumstances, Dealing with each business organization or the economy in the self-colored influence a few important aspects, Companies direct to be up to the two departments or two or more departments, two or more staff for the decide of mutual control.The critical evaluation of the internal control problems in the Dodgers payroll system What is internal control ? Different mountain confound different interpretations. General hatful to understand the internal control for the organization to reduce work of the decision-making errors and defects in the writ of execution of the control, These controls whitethorn be internal oversight, it may be oversight manuals, rules and regulations. These theories be non wrong, but not comprehensive. In unison with the internal control theory, these be only part of the internal control, but not all.Internal control theory suggests that internal control is a systematic framework, It is built on the basis of risk management. The five elements include go over environment , get over activities, try assessment , training and communication and supervise . (Romney and Steinbart 2009). We call this architecture as Committee of Sponsoring Organisations (COSO) internal control framework. The internal control integrated framework has been widely adoptive as the principal way to evaluate internal controls. Will through the five elements to evaluate the internal control problems with the Dodgers payroll system.The control environment is the establishment, Strengthen or weaken the specific policies, surgical operations and their impact on the efficiency of the various factors, mainly refers to the major factor. declare environment film a direct impact on the implementation of internal control and execution of business objectives and related to the overall strategic objectives. Control environment, including the va lues ?? of employees, personnel competence, managements business model, the assignation of rights and responsibilities. In this case take aim found problem is Trolley Dodgers no reasonable structure and clear division of province approach.Because, Campos is payroll chief. However, Campos completely controlled the payroll system for filling out the weekly payroll cards for the employees of the Dodgers. Therefore, the formation of a sensation department, resulting in no mutual constraints of the internal control system. The control activates is Instruction is to help oneself executive management policies and procedures. It throughout the organization, at all levels and die hards, including a variety of activities such as approvals, authorizations, supported that adjustment, business setance evaluation, asset protection and separation of duties.The Trolley Dodgers dont get hold of separation of duties, However,that Campos took advantage of his authorization. He came back durin g vacation to do the payroll. Risk assessment is to identify and analyze the parade of achieving goals related risks, which with the economy, industry, regulatory and operating conditions are constantly changing, the need to establish a mechanism to identify and deal with the agree risks. Dodgers case stoogenot be any problem in this regard. Information and communication is surrounding the control activities are information and communication.From internal and external information must be a certain format and time interval to confirm the capture and transfer to ensure the companys employees to perform their respective duties. Effective communication is a broad communication, including the enterprise from top to bottom, bottom-up and horizontal communication. Effective communication includes the relevant information with parties outside the enterprise powerful communication and exchange, such as customers, suppliers, administration and shareholders.Dodgers does not have very good communication, so of age(p) managers do not understand the financial statements of a problem. Monitoring is the entire business process must be monitored. Through the normal management and control activities and staff activities in the line of business of his duties to monitor, to evaluate the quality of operation of the system. paygrade of different steps depending on the mountain range and implementation of risk assessment and monitor program effectiveness. By understanding the Dodgers case brook determine a cracking part of this monitoring problem.Dodgers not have normal company monitoring department. scarper to administrator green goddesst find employee fraud. Recommendation for Dodgers internal control problems base on understanding of the COSO internal control framework and the Dodgers facts, I recommend Dodgers to assure its internal control system. Internal controls perform three important point, segregation of duties , intone the monitoring and mustiness ensure that the accountancy documents and news report records of the completeness and change by reversalness.All of those three are suitable for Dodgers situation. Three proposals are as follows 1. When these functions are combined in one individual, it is possible to the misappropriation asset and stop 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 take responsibility, its purpose is to strangle each other. Therefore, Separating the incompatible functions of cash enter and cash custody, independent check of cash received and cash deposited, The mandatory vacations with other personnel performing duties during the emplo yees absence. 2. Dodgers need to strengthen monitoring. However, it is necessary to establish an internal size up department.Internal take stock is to strengthen the internal control system is a basic measure. Internal audit responsibilities include the critical critical merchantmanvass of accounts, It similarly includes inspection, evaluation of internal control system is perfect. Through the companys financial report of audit. The audit report submitted to the Board of Directors. hence ensuring the companys internal control system more perfect. 3. Must ensure that the accounting system 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 independent check and performance. Also, Dodgers had internal control issues according to the Committee of Sponsoring Organisations (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 tendency Book references Romney, MB &038 Steinbart, PJ 2009, Accounting information systems, 11th edn, Pearson Prentice Hall, Upper consign River. Academic Journal articles references Bonita K Peterson and doubting Thomas H Gibson. Student health services a case of employee fraud In Journal of Accounting Education 2003 21(1)61-73 HFM (Healthcare pecuniary Management) Illinois Medicare carrier guilty of fraud, agrees to a $gross million settlement. September 98, Vol. 52 anaesthetise 9, p10, 1/4p LIN LINTrolley Dodgers Case carapace STUDY THE TROLLEY DODGERS 1. Identify the tell apart audit objectives for a clients payroll function. Comment o n both objectives related to tests 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. occurrent ii. Completeness iii. true statement iv. Posting &038 Summarization v. Classification vi. quantify i. rouge Audit accusing Occurrence Dodgers must put down payroll payments for alert employees only and should have separation of duties for each t demand. interrogation of Control insure internal control to chink if the payroll payments are for exiting work and animate employees. The test could be examining all the workers time cards, personnel files and round organization chart. They also can debate with employees and observe duties being performed. The tests would canvas printouts of transactions rejected by the ready reckoner as having nonexistent employee numbers. Substantive seek of legal proceeding The test to see if the right o ne dollar bill measurement in the payrolls were put down and salaried properly.They also test to review large-scale dollar amount in the daybook entries, general ledger and payroll earnings. Examine cancelled checks for proper secondment could be equality with a personnel record. ii. mention Audit Objective Completeness Dodgers must record all existent payroll transactions. Test of Control The test is to see if the existing payrolls are preserve. If employees do not get any payment, so they can nowadays report to the employer. They also test to review the renumbered payroll check to find the absent one. Substantive Test of doing They can compare the book and payroll rim statement.Therefore, they will prove the bank atonement and can look for unmatched dollars amount. iii. mention Audit Objective Accuracy Dodgers recorded payroll transactions are for the amount of time actually worked and at the proper pay judge accuracy. Test of Control The test is to see if the righ t hours and right rate are recorded and appraise withholding is correct. Batch congeriess are compared with computer summary reports. attenders could examine authorization in payroll records and personnel files. Substantive Tests of traffic To test for exact dollar amount, hearers could compute gross and net pay.They also can compare pay rate with the industry, review cancel check withholdings by referring to appraise tables and authorization forms in personnel file. iv. Key Audit Objective Posting and Summarization. Dodgers recorded payroll transaction properly include in the master file also properly summarized. Test of Control When payroll master file totals are compared with general ledger totals, attendants should examine initialed summary total reports indicating that comparison has been make. They also must examine mark of internal verification.Substantive Test of Transaction Test clerical accuracy by footing the payroll journal and tracing postings to the journal le dger and the payroll master files. v. Key Audit Objective Classification Dodgers classify all payroll transaction properly and efficiently. Test of Control They should review charts of accounts. If the account classifications are internally verified, then they can examine indication of internal verification. Substantive Test of Transaction They can review time cards and job ticket, and tincture through to savvy distribution.They should compare classification with chart of accounts or procedures manual. vi. Key Audit Objective time Dodger must record all payroll transaction immediately, on the correct appointee and right amount. Test of Control Auditors should examine procedures manual and observe when enter takes place and examine indication of internal verification. Substantive Test of Transaction The hearer compare particular date on checks with date in the payroll journal and compare date on check with date the check cleared the bank. 2. What internal control weaknesses were evident in the Dodgers payroll system?Internal control is a process, stirred by an entitys board of director, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in reliability of financial reporting, effectiveness and efficiency of operations and compliance with laws and regulations. Internal control weakness in the Dodgers Payroll 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 employ a new payroll system that only can be full understand by him. As we know, the purpose of design the internal control is to stay or detect material misstatement in the financial statement. Due to this case, Campos can advantageously commit fraud because there are no other people tha t can understand the design of the internal control. ii. No independent check and performanceCampos controlled the system so completely that he in person filled out the weekly payroll card for each of the four vitamin C employees. He can record any unsound 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 transient or permanent 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 ad hominem gain and adjusting the records to cover up the theft. As we can see in this case, Campos was the only one who responsible for every task. iv. weak ness of the work environment There is secret approval between employees and management. This showed that both Campos and his cohort have low work ethic. Campos routinely blow up the number of hours worked by several employees and then split the resulting over payment cardinal-fifty with those individuals.In addition to this, Campos also embezzle several hundred thousand dollars from his employer. 3. Identify audit procedure that might have led to the discovery of the fraudulent avoidance mastermind by Campos. Audit procedure is the detailed instruction for the collection of a type of audit evidence that is to be obtained at some time during the audit. i. The tender must understand distinctly the function chart Auditor should go through the Dodgers payroll fall down chart. The hearer must understand clearly the flow chart. From that, the auditor can canvass how the payroll system is going on actually.Then, the auditor would see there are no independent checks that have been done by Campos. The payroll department also does not have segregation of duties and all that work is done by Campos only. ii. The auditor can interview employees in payroll department. The auditor can interview employees in payroll department. The auditor can ask whatever question that they think its very important and need to know. Like, how much Campos pay for daily operations whole shebang for every level of staff, and how Campos manage the time card. The auditor will know more detailed about the payroll process. ii. The auditor test for nonexistent employees For make sure the all transaction that have recorded by Campos and payroll department is genuinely exist and they make payment to the non delusive employees, the auditor compare names on cancelled 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 au ditor can run test of control by selected transaction in the payroll with Human 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 every which way or select those checks the auditor thinks are most likely to be in error or a confederacy of this method could be used. Besides that, the auditor request surprise payroll return key from payroll department. When the auditor requests for payroll comeback suddenly, for sure the payroll department do not chance and do not have enough time to make correction on their system. So, Auditor will see the real transaction that have make by that department. Finally, the uditor can mite 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 keeping employees have intention to do that fraud. v. The auditor compare pay rates with the same positions in other baseball team in the league. The auditor also should understand business temper and make comparison with another similar business nature.From that result, the auditor will know how much is exactly pay rates usually paid to the professional baseball. subsequently 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.