Summary The Brooklyn Trolley Dodgers is a professional baseball


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Please create a Reply to the attached Case if I get an A I will Tip well. Instructions: Case 3.1 to Reply to.doc Summary The Brooklyn Trolley Dodgers is a professional baseball team originally from New York City area. Due to lack of players of high caliber and finance, the team moved to Los Angeles seven decades later. Walter O’Malley, owner of the Dodgers, saw an opportunity to make the team more profitable. The team found success during the 1980s and 1990s, becoming the most profitable franchise in baseball. In 1997, the franchise was sold to Rupert Murdoch, a media mogul. When Walter O’Malley’s son, Peter, was managing the Dodgers, he employed Edward Campos as the operations payroll chief. Campos implemented a new payroll system that only he fully understood. He was trusted by many in the franchise, but in reality Campos had been embezzling from his employer by adding pretend employees to the system, expanding the hours worked by employees and dividing the overpayments with those individuals. The scheme was only discovered when Campos’ position was temporarily replaced by the controller when Campos was ill. Campos was sentences to eight years in prison and owed restitution of $132,000 to the Dodgers, and partners made restitution and were placed on probation. Auditing Standard No. 5 says that “the auditor’s opinion relates to the effectiveness of the company’s internal control over financial reporting as of a point in time and taken as a whole” (PCAOB, 2016). In this case, there is a weakness in the internal controls due to the lack of segregation of duties. According to Ghosn, “segregation of duties (SOD) is a basic building block of sustainable risk management and internal controls for a business” (Ghosn, 2016). Campos was in charge of the whole payroll system and controlled it entirely, which meant there were no internal controls or risk management in place. In the company’s payroll system, the Dodgers should have employed a service organization to process its payroll transactions rather than only letting Campos be the operations payroll chief and monitor all the payroll transactions by himself. He was the only one who designed and operated the payroll. It had given him a great opportunity to take advantage of the payroll system. The Dodgers did not have the separation of duties and let Campos take advantage of his authorization. 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. The key audit objectives are occurrence and existence, completeness, accuracy, presentation and disclosure. Completeness means that “due to the huge amounts involved in the payroll, there is a need to verify that all of the amounts paid out to employees are included” (Brown, 2016). Auditors should level the control risk on all payroll transaction cycles, which is an auditor’s main objective in performing tests of controls. In order to determine the nature, extent, and timing of the year-end substantive tests auditors need to assess control risks for a payroll transaction cycle to get strong evidence. “The payroll cycle consists of all of the steps an organization makes from the beginning of a pay period to its end” (DuBois, 2016). A payroll transaction cycle has two key accounts which are accrued payrolls and payroll expense. Auditors only consider these two accounts if the completeness objective is violated. After checking the payroll expense and considering it with the recent average employee pay raise, auditors will develop an expectation. If the payroll expense provided by the clients is out of the auditor’s expectation, then, a substantive procedure and tests are needed to further check the differences. 1. What internal control weaknesses were evident in the Dodger’s payroll system? There are several internal control weaknesses in the Dodger’s payroll system: In the payroll transaction syst

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