UNIVERSITI TUNKU ABDUL RAHMAN

ACADEMIC SESSION: 202201

Bachelor of Accounting (Honours)

UKAF4043 INTERNAL AUDIT

GROUP ASSIGNMENT

METHODOLOGY
This project is designed to provide a student-centered approach to learning, where the students
take the initiative to research and learn on a topic that is relevant to the unit.

Students will acquire the relevant and in-depth knowledge of the assigned topics.

OBJECTIVES
The objectives of the assignment are as follow:

(1) Understand the responsibility of an internal auditor in fraud detection

(2) Describe possible actions the internal auditor can take when he or she suspects fraud may
exist.
(3) Recommend characteristic of an effective corporate structure

SOFT SKILLS LEARNING OBJECTIVE

Students will learn the following:
• Team work and team spirit
• Group coordination
• Leadership and task delegation
• Simple research, writing skills and referencing skills
• Reading skill
• Critical and analytical thinking skills
• Group dynamics
• Individual responsibility and accountability

ASSIGNMENT WEIGHTAGE
This assignment carries 20% of the total assessment for this unit.
UKAF4043 INTERNAL AUDIT

SUBMISSION DATE
Please submit your assignment latest by Week 5, Friday 25th. November 2022 before 5.00 p.m.
Late submission will be penalized through deduction of marks.

GUIDELINE
The written assignment is to be prepared on a group basis, i.e. not more than 6 members in a
group. The selection of the group members MUST be from the same tutorial group that the
students attend. After the formation of groups, each group leader shall submit the names of the
group members to their tutor before end of WEEK 2. IT IS THE STUDENT’S
RESPONSIBILITY TO FIND A GROUP AND THIS RESPONSIBILITY IS NOT
TRANSFERABLE. All members in each group are expected to contribute in producing the
group assignment.

- The report should be word-processed, font-size 12, font Times New Romans, 1.5 spacing.
- Adhere closely to APA referencing style.
- Submission must be via Wble. You are required to submit the softcopy of the assignment
in the folder created in the Wble before or on the submission date and time.
- Late submission will be penalized through deduction of marks.

Submission of report should include the following documents in this order:

- Cover page with title of project [Appendix 1]
- Grading Rubric for Assignment [Appendix II]
- Written report
- References (source of information)
- Appendix (if any, e.g. diagram, charts, tables, matrices, etc)

GROUP ASSIGNMENT QUESTION

This assignment is a group assignment and must be done in group.
UKAF4043 INTERNAL AUDIT
QUESTION:

Synopsis of the case

You are the head of the Internal Audit department of Tallahassee Bean Counters (TBC) from
Florida, which owns a minor league baseball team. The team manager Franklin Kennedy has
received an anonymous tip and feels it warrants further investigation. He has highlighted the
matter to the management of TBC and you have been instructed by the management to carry out
the initial investigation base on the tip off. However, the management has requested that the
investigation be done quietly. For your initial investigation they have asked you concentrate on
the last four months. Details of the company is as follows:
Company revenues are generated from ticket sales, parking, concessions, programs and
promotional fundraising. The company president, Phil Ackers, oversees fundraising. Ben Hill,
office manager, oversees the day to day functioning of the office. Tucker Johnson, general
manager, has responsibility for the baseball players.
TBC’s office expenses are typical of a small firm. Other expenses are typical of a minor league
baseball team and include equipment concession goods, programs, team travel and memorabilia
for resale. Though payroll timesheets are compiled in-house, the TBC contracts out the payroll
function to ADP Payroll Services.
During your investigation you noted that there seems to be an unusual amount of tension in the
office. When you inquired about it, the employees brush it off as normal. Your observation
indicates that Ben Hill, the office manager, observes and checks his employees’ work minutely.
He has complained to you about employee turnover and incompetence. Ben grumbles that
without his efforts the team would fold.
During your lunch break one day, you run into the equipment manager, Sam MAcarty. Sam talks
about some of the employees in the front office. Below is a summary of Sam’s opinions:
Phil Ackers – Company President – “Phil’s a nervous little fellow. He’s always out on
promotional trips. He may be president but it is Ben Hill who really runs the place.”
Terri Hughes – Assistant to the President – “Terri guards Ackers’ office like the Centurian
Guards. It’s impossible to get hold of Ackers to ask the simplest question because Terri will nip
your heels right out of the office.”
Tucker Johnson – General Manager – “[Link] is great. He used to play pro. The team loves
him. He can be tough, but he’s good. We’ve sent a lot of guys ups to the majors. He doesn’t like
the paperwork. He lets me do most of the ordering and stuff.”
Ben Hill – Office Manager – “Ben’s a piece of work. He dresses only in suits and is always
hitting on the 20 years old, even though he’s got to be 40. Got a bunch of ex-wives. The girls
think he’s disgusting; maybe it’s the comb-over. Some people in the office complain that he’s
‘all over’ their work but he sure keeps the place running smoothly. Luckily, he’s healthy, I don’t
know what would become of this place if he ever took a vacation. He changed our equipment
vendor recently. The new rep and Ben seem tight. I think it’s a good change. Not only is the
equipment always on time but also the saleman, Charlie Thrugood delivers it personally! Sure
has kept [Link] off my back.”
Michelle Shelton - A/P Clerk – “She’s Tucker Johnson’s niece. She works hard but as soon as it
is five p.m, she’s out at the dugout hanging around the guys. She’s cute and all but I think the
guys are afraid of asking her out because of [Link].”
Candie Harris – Receptionist – “Candie’s great. She’s always nice to me and gets stuff for me if I
need it.”
Your observation of various financial functions.
Concessions
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You arrive an hour before the gates open to observe the concession operation. There is one
concession booth. Holly Hope the supervisor, brings carts of supplies from the locked storeroom
located beneath the bleachers. Holly rushes back and forth between the storeroom, always
answering questions and seeming to do three things at once. You make a trip to the storeroom
with her toward the end of the evening and note that it seems to be neatly ordered and through
some supplies are low, they are not in real danger of running out of anything.
There are three people working in the booth and six college-aged young people working the
bleachers. The blenchers workers come back periodically to refill drinks and trays. You find
yourself pitching in and helping to fill trays of drinks for the students. By the end of the night, a
grateful Holly has offered you a job.
You note the bleacher workers are given $50 in small bills at the beginning of the night. When
they return with an empty tray, they are required to turn over the money for the tray they sold.
For example, if they sold 40 drinks, they turn over $40.00. At the end of the night, each returns
$50.00 to the register.
The concession booth closes during the ninth inning and the money counting begins. The register
report shows number of items sold and total receipts. Holly and one worker count the cash and
compare the numbers with the register- generated receipts. Ben Hill arrives before they have
finished and makes the two stay until they come close to a balance.
Ben then takes the register tape and cash to the office under the protection of an armed security
guard. Ben locks the money in the safe, and leaves the register tape on Michelle’s (A/R clerk)
desk. The next day Michelle and Ben recount the money to make certain it reconciles with the
number of items sold on the register report. Michelle creates receipts in the bookkeeping
program that automatically adjusts the inventory and creates a deposit slip. Ben Hill, Teri
Hughes, or Phil Ackers will deposit the money.
Equipment Purchases
Equipment orders originate with Tucker Johnson, the general manager or, Sam McCarty, the
equipment manager. When new equipment is needed, one or the other tells Ben Hill. Ben
chooses a vendor and has Michelle generate a purchase order in the bookkeeping program. All
equipment purchase orders are “open” so they can have the best available price at that time. The
bookkeeping program also generates a receiving report that Michelle returns to Sam. You note
that Ben insists that Michelle give him the purchase order for his verification before he mails it
out. You are at the training facility one day when an order arrives. You note that Charlie
Thurgood, the salesman from Sports Equipment, personally delivers the equipment. Sam
carefully counts the shipment and checks off the appropriate amounts on his receiving report.
Charlie tells Sam he will drop the invoice of with Michelle because he wants to stop in the office
and see his good friend Ben. Sam later takes his receiving report to Michelle. Michelle compares
the receiving report, the purchase order and the invoice to make certain all the equipment has
arrived then generates a check. She forwards the check and supporting documents to Ben, who
signs the check and mails it to Sports Equipment.

Parking:
You spend an evening watching a parking operation. You notice there are five employees
working. The workers wear carpenter’s aprons and collect $2.00 for cars and $3.00 for heavy
vehicles such as RVs. They put the cash in their aprons, and put a ticket under the windshield
wiper of each vehicle. You count 1500 parking spaces in the lot. The crew quits collecting
money an hour after the game begins. The workers turn their aprons and remaining parking
tickets over to the supervisor. The supervisor then takes the aprons and tickets to the ticket booth
UKAF4043 INTERNAL AUDIT
where he reconciles the number of tickets sold with the cash in hand. Ben supervises the process
and verifies the amounts.
Payroll
You find that payroll is subcontracted out to ADP Payroll Services. Permanent staff and players
are paid bi-monthly. Players have eight month contract while permanent staff has 9 to 12 month
contracts. Salaried employees are paid on the 1st and 15th of each month. Game day employees
are paid after each home game series. Candie Harris collects the time cards from the supervisor
of each division after each game (concession, parking program and ticket sales, security and the
team mascot). Each employee’s time card is signed by his or her supervisor and co-signed by the
person from the front office who is responsible for that division. Candie creates a consolidated
timesheet after each series showing workers name, hours worked and rate of pay. Ben Hill
verifies her numbers and sends the sheet on to ADP. ADP tabulates the amount owed in payroll
including matching FICA taxes and distributes the payments. Salaries workers have their money
deposited directly into their bank accounts; checks are written for the game day employees. ADP
sends a detailed listing of the amounts paid back to the TBC. Ben checks over the listing the
forwards a summary to Michelle who reimburses ADP for the salaries and taxes paid.

Programs
The team orders a large number of programs before the season begins, which includes
advertisers and team biographies and histories. Prior to each games series TBC orders inserts that
contain updated player statistics as well as information on the opposing team. Two people sell
programs at each game. One salesperson is near the front gate, one is near the concession stand.
The program sellers arrive before the game to stuff the new inserts into the programs. They
continue to sell programs until the 7th. inning. At that time they return their money to Ben Hill
who counts with them. Ben then takes the money with him to the ticket booth where he helps
count the ticket revenue and parking receipts. The money is taken back to the office safe under
armed guard. As with the other sources of revenue, Ben turns the money over to Michelle the
next morning. Michelle determines the number of programs sold by dividing the total receipts by
$3.00 (sale price). Once a month she does a physical count of the remaining programs to ensure
there is no leakage. Michelle enters the receipts and deposit slip for programs into the
bookkeeping system. The bookkeeping program keeps a perpetual inventory count. Ben hill, Phil
Ackers or Terri Hughes deposit the money into the bank and return the deposit slip to Michelle
for verification.
Promotions(Fundraising)
Phil Ackers hosts a series of fundraising/promotional activities throughout the Southeastern
United States. He makes an occasional trip to Boston, since the TBC is affiliated with the Boston
Sox. He rents a hotel conference room, displays team souvenirs and has a team member or two to
sign the merchandise and autographs. The merchandise is sold to raise money for the team as
well as promote the team. Phil uses Seminole Catering to provide food, which he transport with
him to the various affairs. Phil usually drives to the events within a few hours driving time of
Tallahassee and flies coach to events further away. Phil returns all money and receipts to Terri
Hughes. Terri verifies the expenses and forwards the receipts, expense invoices and cash to
Michelle. Michelle enters everything in the bookkeeping program. Ben Hill usually deposits the
promotional receipts.
Tickets Sales
The ticket booth is a small wooden structure with three windows. There are three elderly ladies
working there, Myrna Myers, Janice Lipponi and Gerta Child. They have obviously been
working together for a long time since they spend the evening catching up on each other’s
UKAF4043 INTERNAL AUDIT
grandchildren and their activities. The women meet outside the booth two hours before game
time and enter the booth together. There are no pre-sold tickets. They accept cash and checks
only. It is an old fashioned affairs, the ladies ring up the sales on old registers and all tickets
come off one sequentially numbered roll. A security officer is posted nearby as tickets are sold.
An hour after the opening pitch, the ladies close up the windows and count the money. Janice
and Gerta are permitted to leave when Ben Hill and the security officer arrive. Ben and Myrna
recount the money and verify the ticket log. Ben takes the ticket log, along with the cash under
guard to his office safe. As you leave with Ben and the guard, you notice Myrna taking a small
notebook out of her purse and making notations.
The next morning, Ben gives the ticket log(which shows the number of each type of ticket sold)
to Michelle who enters the sales into the bookkeeping system, generates a deposit slip and adds
the money to the post-game deposit. Ben Hill, Phil Achers or Terri Hughes deposits the money.
The deposit slip is returned to Michelle for reconciliation. Michelle and Terri do the monthly
bank reconciliation.

REQUIRED:

Write up an analysis of the Tallahassee BeanCounters case that comprises of the following:

(a) Identify the red flags and possible suspects in the case and state your rationalization.
(15 marks)

(b) Identify where internal controls over material and accountancy are weak and who is in
the position to exploit those weaknesses. This discussion should include who could have
committed the fraud, how the fraud could have been committed and the types of fraud
committed and the evidence of intent. (30 marks)

(c) Write requests to specific individuals you believe could provide the information you
want, making sure your letters do not “tip off” any suspects. Be specific in your
description. (15 marks)

(d) Write up additional requests that you may want to make outside the BeanCounters for
additional information such as invoices from phone companies, property registration
records or surveillance data on the parking lot. (15 marks)

(Total 75 marks)
UKAF4043 INTERNAL AUDIT
Marks Allocation
Written presentation
Assessment Criteria Weight Marks
Quality – Clarity about the purpose of the assignment ,clear writing in an 10% 10
appropriate style, with proper formatting and paragraphing and language
Analysis – critical analysis and discussion with proper use of concept and 75% 75
principles – The break down as per the parts stated above
Conclusion – a conclusion which draws application from the foregoing 15% 15
and recommends improvement for the weakness in internal control
Total 100% 100
(TOTAL 100 MARKS)
Marks will be deducted for failure in complying with the instructions provided.

REFERENCE
For referencing, use APA (6th edition) referencing system.

COVER PAGE (REFER TO APPENDIX BELOW)

The cover page followed by the mark sheet is to be placed at the front of the project report.
UKAF4043 INTERNAL AUDIT
[Appendix I]

ASSIGNMENT COVER PAGE

Universiti Tunku Abdul Rahman

Jan 2022(Academic session: 2022 01)
Course Details

Tutorial Group:

Tutor’s Name:

Student Details

Name Student ID

1.

2.

3.

4.

5.

Total Marks
(100 marks)

Total Assessment (20%):

[Appendix II]
 UKAF4043 INTERNAL AUDIT

Grading Rubric for Assignment

Excellent Good Satisfactory Poor Marks

awarded
Part (a) (15 13- 15 marks 9 - 12 marks 5 - 8 marks 0-4 marks
marks)
Evidence of very detail and
thorough discussion on the Evidence of good discussion Evidence of satisfactory Evidence of little
case with little reference on the case with little discussion on the case discussion on the
and rationalization to reference and rationalization with little reference and case with little
support the arguments. to support the arguments. rationalization to support reference and
the arguments rationalization to
support the
arguments.
Part (b) 25 – 30 marks 17 - 24 marks 9 – 16 marks 0 – 8 marks
(30 marks)
Highly competent with very - Competent with detail and - Satisfactory - Lack of
detail and thorough thorough discussion on discussion on the ability /Little
discussion showing the subject subject discussion on
understanding on the the subject
subject
Part (c) 13 – 15 marks 9 - 12 marks 5 – 8 marks 0 – 4 marks
(15 marks)
Highly competent with very - Competent with detail and Satisfactory discussion Lack of ability
detail and thorough thorough discussion on on the subject /Little discussion
discussion showing the subject on the subject
understanding on the
subject
Part (d) 13 – 15 marks 9 - 12 marks 5 – 8 marks 0 – 4 marks
(15 marks)
Highly competent with very - Competent with detail and Satisfactory discussion Lack of ability
detail and thorough thorough discussion on on the subject /Little discussion
discussion showing the subject on the subject
understanding on the
subject
Recommendation 13– 15 marks 9 - 12 marks 5 – 8 marks 0 – 4 marks
and conclusion
(15 marks) Highly competent with very Competent with detail and Satisfactory comparison Lack of ability
detail and thorough thorough comparison and and recommendation on /Little comparison
comparison and recommendation on improvement of internal and
recommendation on improvement of internal audit process recommendation
improvement of internal audit process on improvement of
audit process internal audit
process
Quality of the 5 marks 3 - 4 marks 2 marks 0 - 1 mark
project (5 marks)
- Excellent terms and - Good terms and grammar - Satisfactory terms and - Poor terms and
grammar used. used. grammar used. grammar used.
- Interesting and coherent - Good format, structure - Satisfactory format, - Poor format,
format, structure and and layout structure and layout structure and
layout - Effective use of - Satisfactory use of layout
- Very effective use of diagrams/tables diagrams/tables - No
diagrams/tables diagrams/tables
Comments by Marker: TOTAL MARKS
(100 marks)
Signature of Marker:

Date: