The Trolley Dodgers discussion questions

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1- Answer the questions attached

2- The plagiarism must be ZERO

3- List the references used

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1. Identify the key audit objectives for a client’s payroll function. Comment on objectives related to tests of controls and substantive audit procedures.

2. What internal control weaknesses were evident in the Dodgers’ payroll system?

3. Identify audit procedures that might have led to the discovery of the fraudulent scheme masterminded by Campos.

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First Keystone Bank A Japanese bank introduced the concept of around-the-clock access to cash in the 1960s when it installed the world’s first cash-dispensing machine. In 1968, the first networked ATM appeared in Dallas, Texas. Two generations later, there are more than two million “cashpoints,” “bancomats,” and “holes-in-the-wall” worldwide, including one in Antarctica. Not surprisingly, ATMs have been a magnet for thieves since their inception. In 2009, an international gang of racketeers used a large stash of counterfeit ATM cards to steal $9 million from hundreds of ATMs scattered around the globe in a well-planned and coordinated 30-minute crime spree. Several hightech thieves have hacked into the computer networks of banks and modified their ATM software. One such miscreant reprogrammed a network of ATMs to change the denomination of bills recognized by the brainless machines—the ATMs treated $20 bills as if they were $5 bills. High-powered video cameras and miniature electronic devices attached to ATMs have been used to steal personal identification numbers (PINs) from a countless number of unsuspecting bank customers. A variety of low-tech schemes have also been used to rip off banks and their customers via ATMs, including forced withdrawals and postwithdrawal armed robberies. “Ram-raiding” involves using heavy-duty equipment to rip an ATM from its shorings. The ram-raiders then haul the ATM to a remote location and blast it open with explosives. The most common and lowest-tech type of ATM pilfering involves the aptly named tactic of “shoulder-surfing.” Many banks have suffered losses from their ATM operations due to embezzlement schemes perpetrated by employees. One such bank was the Swarthmore, Pennsylvania, branch of First Keystone Bank. Swarthmore, a quiet suburb of Philadelphia, is best known for being home to one of the nation’s most prestigious liberal arts colleges. In 2015, Forbes Magazine ranked Swarthmore College as the sixth best institution of higher learning in the United States—two slots below Yale, but two slots higher than Harvard. In January 2010, three tellers of First Keystone’s Swarthmore branch were arrested and charged with stealing more than $100,000 from its ATM over the previous two years. The alleged ringleader was Jean Moronese, who had worked at the branch since 2002 and served as its head teller since 2006. According to media reports, Moronese told law enforcement authorities that she initially began taking money from the branch’s ATM in 2008 to pay her credit card bills, rent, and day care expenses. No doubt emboldened by the ease with which she could steal the money, Moronese reportedly began taking cash from the ATM “just to spend” because she “got greedy.” Prior to taking a vacation in the fall of 2008, a tearful Moronese approached one of her subordinates and fellow tellers, Kelly Barksdale, and confessed that she had been stealing from the ATM. Moronese “begged” Barksdale to help her conceal her thefts “because she didn’t want her children to see her go to jail.” Barksdale was apparently persuaded by Moronese’s tearful plea and agreed to help her cover up the embezzlement scheme. In fact, the cover-up was easily accomplished. According to the local police, Moronese and Barksdale simply changed the ledger control sheets that were supposed to report the amount of cash stored in the ATM and in the locked vault within the ATM. First Keystone’s internal control procedures mandated that two employees be involved in resupplying the ATM and its locked vault and in maintaining the ATM ledger control sheets. However, either Moronese or Barksdale completed those tasks by themselves. In early 2009, a third teller, Tyneesha Richardson, overheard Moronese and Barksdale discussing the embezzlement scheme. Richardson then reportedly asked Moronese for money to pay off her car loan. Moronese agreed to give Richardson the money and told her that she shouldn’t worry because “the bank had a lot of money and they would never miss it.” After telling Barksdale that she had given money to Richardson, Moronese told Barksdale that if she ever needed any money “to let her know.” Not long thereafter, Barksdale allegedly asked Moronese for $600 to pay her rent. An internal audit eventually uncovered the embezzlement scheme at First Keystone’s Swarthmore branch. That internal audit revealed that $40,590 was missing from the branch’s ATM, while another $60,000 was missing from the locked vault within the ATM’s interior. While being interrogated by law enforcement authorities, Barksdale reportedly confessed that she and her colleagues had also stolen money from the local municipality. City employees periodically dropped off at the First Keystone branch large bags of coins collected from Swarthmore’s parking meters. Tellers at the branch were supposed to feed the coins into a coin-counting machine and then deposit the receipts printed by the machine into the city’s parking account. According to Barksdale, she and her two fellow conspirators diverted money from Swarthmore’s parking funds and split it among themselves. The police estimated that the three tellers stole approximately $24,000 of the parking funds. In January 2010, when the three tellers were arrested, they did not have far to go since the Swarthmore police station was across the street from the First Keystone branch where they worked. In commenting on the case, the local district attorney observed that Barksdale and Richardson had a choice to make when they learned of Moronese’s embezzlement scheme and that each had made the wrong choice. “So, the lesson is you can either be a witness or you can be a defendant. These two chose to be defendants.” The district attorney also commented on the branch’s failure to require employees to comply with internal control procedures. “The case is yet another example of the importance of not only implementing internal accounting safeguards, but ensuring that those safeguards are being followed by all employees at all levels of the business.” Questions 1. Prepare a list of internal control procedures that banks and other financial institutions have implemented, or should implement, for their ATM operations. 2. What general conditions or factors influence the audit approach or strategy applied to a bank client’s ATM operations by its independent auditors? 3. Identify specific audit procedures that may be applied to ATM operations. Which, if any, of these procedures might have resulted in the discovery of the embezzlement scheme at First Keystone’s Swarthmore branch? Explain. The Trolley Dodgers In 1890, the Brooklyn Trolley Dodgers professional baseball team joined the National League. Over the following years, the Dodgers would have considerable difficulty competing with the other baseball teams in the New York City area. Those teams, principal among them the New York Yankees, were much better financed and generally stocked with players of higher caliber. After nearly seven decades of mostly frustration on and off the baseball field, the Dodgers shocked the sports world by moving to Los Angeles in 1958. Walter O’Malley, the flamboyant owner of the Dodgers, saw an opportunity to introduce professional baseball to the rapidly growing population of the West Coast. More important, O’Malley saw an opportunity to make his team more profitable. As an inducement to the Dodgers, Los Angeles County purchased a goat farm located in Chavez Ravine, an area two miles northwest of downtown Los Angeles, and gave the property to O’Malley for the site of his new baseball stadium. Since moving to Los Angeles, the Dodgers have been the envy of the baseball world: “In everything from profit to stadium maintenance … the Dodgers are the prototype of how a franchise should be run.” During the 1980s and 1990s, the Dodgers reigned as the most profitable franchise in baseball with a pretax profit margin approaching 25 percent in many years. In late 1997, Peter O’Malley, Walter O’Malley’s son and the Dodgers’ principal owner, sold the franchise for $350 million to media mogul Rupert Murdoch. A spokes-man for Murdoch complimented the O’Malley family for the long-standing success of the Dodgers organization: “The O’Malleys have set a gold standard for franchise ownership.” During an interview before he sold the Dodgers, Peter O’Malley attributed the success of his organization to the experts he had retained in all functional areas: “I don’t have to be an expert on taxes, split-fingered fastballs, or labor relations with our ushers. That talent is all available.” Edward Campos, a longtime accountant for the Dodgers, was a seemingly perfect example of one of those experts in the Dodgers organization. Campos accepted an entry-level position with the Dodgers as a young man. By 1986, after almost two decades with the club, he had worked his way up the employment hierarchy to become the operations payroll chief. After taking charge of the Dodgers’ payroll department, Campos designed and implemented a new payroll system, a system that only he fully understood. In fact, Campos controlled the system so completely that he personally filled out the weekly payroll cards for each of the Dodgers’ 400 employees. Campos was known not only for his work ethic but also for his loyalty to the club and its owners: “The Dodgers trusted him, and when he was on vacation, he even came back and did the payroll.” Unfortunately, the Dodgers’ trust in Campos was misplaced. Over a period of several years, Campos embezzled several hundred thousand dollars from his employer. According to court records, Campos padded the Dodgers’ payroll by adding fictitious employees to various departments in the organization. In addition, Campos routinely inflated the number of hours worked by several employees and then split the resulting overpayments 50-50 with those individuals. The fraudulent scheme came unraveled when appendicitis struck down Campos, forcing the Dodgers’ controller to temporarily assume his responsibilities. While completing the payroll one week, the controller noticed that several employees, including ushers, security guards, and ticket salespeople, were being paid unusually large amounts. In some cases, employees earning $7 an hour received weekly paychecks approaching $2,000. Following a criminal investigation and the filing of charges against Campos and his cohorts, all the individuals involved in the payroll fraud confessed. A state court sentenced Campos to eight years in prison and required him to make restitution of approximately $132,000 to the Dodgers. Another of the conspirators also received a prison sentence. The remaining individuals involved in the payroll scheme made restitution and were placed on probation. Epilogue The San Francisco Giants are easily the most heated, if not hated, rival of the Dodgers. In March 2012, a federal judge sentenced the Giants’ former payroll manager to 21 months in prison after she pleaded guilty to embezzling $2.2 million from the Giants organization. An attorney for the Giants testified that the payroll manager “wreaked havoc” on the Giants’ players, executives, and employees. The attorney said that the embezzlement “included more than 40 separate illegal transactions, including changing payroll records and stealing employees’ identities and diverting their tax payments.” A federal prosecutor reported that the payroll manager used the embezzled funds to buy a luxury car, to purchase a second home in San Diego, and to travel. When initially confronted about her embezzlement scheme, the payroll manager had “denied it completely.” She confessed when she was shown the proof that prosecutors had collected. During her sentencing hearing, the payroll manager pleaded with the federal judge to sentence her to five years probation but no jail term. She told the judge, “I cannot say how sorry that I am that I did this, because it’s not who I am. I have no excuse for it. There is no excuse in the world for taking something that doesn’t belong to you.” Questions 1. Identify the key audit objectives for a client’s payroll function. Comment on objectives related to tests of controls and substantive audit procedures. 2. What internal control weaknesses were evident in the Dodgers’ payroll system? 3. Identify audit procedures that might have led to the discovery of the fraudulent scheme masterminded by Campos. ...
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mikewinter3
School: UCLA

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Trolley Dodgers and First Keystone Bank

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Trolley Dodgers and First Keystone Bank
The attached word document addresses the question “Answer the questions attached” by
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First Keystone Bank Questions



The Trolley Dodgers Questions


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Running Head: The Trolley Dodgers

The Trolley Dodgers Questions

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The Trolley Dodgers
The Trolley Dodgers Questions
1.

Key audit objective for a client's payroll function is evaluating the control risk level within
the payroll cycle. The purpose of testing is to focus on completeness, which involves assessing
if all payroll liabilities reports include their right amounts and within their actual time of
occurrence) and auditors check for unusual variations within periodic payroll accrual and
expense (Knapp, 2016). Payroll accumulation and expense for comparable seasons considering
changes in employee numbers or increase in salary helps in identifying these unusual
vari...

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