Narration: The Sterlin and Flinch Global was founded a decade ago, and as it aims to be on top of the

business world. As technology emerged, the company embraced it carefully. They shifted from manual
techniques to computerized system, this include their payroll system.

Scene 1:

Internal Auditor: Hi good morning! I would like to speak with Mr/Ms.________.

Secretary: Yes sir, this way please.

Internal Auditor: Mr/Ms.________, I’ve been running through the “Payrolls document” and it
seems like we are having a Php50,000 misstatement during the month of November.

Payroll Supervisor: It’s likely just a coincidence Mr/Ms____. I’ve been thoroughly reviewing the
document before submitting it to the accounting department. Or probably the system is just lagging on
the reconciliation, we also have a lot of overtime in the warehouse during that month.

Internal Auditor: I already consider that, but upon cross-referencing the Overtime Authorization
forms there are six entries for F. Delos Santos and C. Smith that don’t exist in the HR Master File.

Payroll Supervisor: Let me check that. Oh…. They’re probably one of our part-timer. I just forgot
to update their profile. Thank you for telling me Mr/Ms________

Internal Auditor: But their wages should be given through Accounts payable and not into Payroll
system. I think I already got what I needed here, thank you for your time Mr/Ms

Scene 2:

Internal Auditor: With accordance to all the evidence that I’ve gathered, it is clear that there is a
massive breach of internal control happened. Mr/Ms._____ was the one entering the data and also
approving it, giving her a chance to add a ghost employee.

CFO: Thank you, Mr/Ms._______. I can’t believe it, Mr/Ms__________ was our most trusted
supervisor. Mr/Ms_____ I want a full forensic audit of the Payroll system dating back two years, I just
want to make sure how long this fraud circulating in our company.

Internal Auditor: This is noted Maam/Sir______.

Scene 3:

Junior Accountant: Sir, good morning. I am_________, the newly hired junior accountant. Btw
sir, I am here to report that the new industrial printer arrived this morning.

Senior Accountant: I’m glad to welcome you here, please join me check our new Fixed Asset so
that I can also help you go through with our process.
 Senior Accountant: So we start by checking the Purchase order against the receiving report to
make sure we actually got what we paid for.

Junior Accountant: I already check it sir. The receiving report and Purchase order was stating
exactly the same.

Senior Accountant: That’s great, now let’s proceed with Asset tagging phase. Here’s a sticker
that we will put in every fixed asset that we newly acquire, it includes an Asset ID number and the FA
before the number indicates that it is a fixed asset.

Junior Accountant: Why do we need the physical tag if its already recorded in our computer sir?

Senior Acccountant: Every year we conduct a physical verification, if we failed to find a certain
asset, we have a problem.

Junior Accountant: Now that we already tag it sir. I will log it to the Fixed Asset Registrar. I’m
putting in the cost, the location and the department head responsible for it.

Senior Accountant: Okay great but don’t forget to include the depreciation. This printer has a 5
years useful life and we are using a straight-line depreciation.

Junior Accountant: Noted sir. Btw how does this company approach if this printer breaks in the
following year sir?

Senior Accountant: We do record disposal, we can’t keep assets on our books that don’t exist
anymore, it can cause a lot to our company.

Narration: Learning the Payroll system, how it works and the things to consider such as segregation of
duties, transaction authorization and access control. This can help the company prevent breach, fraud
and preserve the integrity of each employee. In addition, understanding the fixed asset system, prevent
theft and misstatements.