ACC5218 - Auditing Practice - Susan Kweskia Case Study Assessment Answer

Internal Code: E_AI_DIDH_BGJ Code: ACC5218

Susan Kweskia Case Study Assessment Answer

Assignment Task: ACC5218  This Assignment is designed to give students an opportunity to: 1. develop problem solving, critical thinking, teamwork and judgement skills in relation to the practice of auditing in contemporary business organisations. 2. analyse and apply the regulatory framework that applies to auditing practice. 3. effectively communicate results from the application of the auditing process. This assignment provides students the opportunity to: 1. demonstrate authentic workplace processes or responsibilities in the auditing profession relating to team-based projects e.g. skills in communication, negotiation, interpersonal, conflict management , leadership, time management, etc. Assignment 2 follows on from the case study used in Assignment 1, that is, the case of Hangout chain of restaurants (Hangout Restaurant Company). ACC5218  The company has more than 30 employees across the five (5) restaurants. Susan Kweskia, who is married to Aaron, maintains the employee and payroll records and calculates the fortnightly pays. All employees are paid at a standard wage for the hours that they work to a maximum of 80 hours per fortnight. As there are only a small number of employees at each Restaurant, the Restaurant Manager records all employee hours per day and emails them to Susan at the end of each fortnight. Each Manager has a secure password to send employee information to Susan’s email account. Aaron has now become worried that there may be errors occurring in the payroll, especially when all of the payroll functions in each Restaurant are handled by one person, namely the respective Manager of the restaurant. The issues highlighted with respects to the operations of the Seal Beach Restaurant raises concerns for him about potential payroll fraud and/or errors in the restaurants. ACC5218 Aaron requests your auditing firm to also investigate the possibility of fraud and/or error in the company’s payroll. As part of this payroll audit, Aaron would also like to know what could be done to decrease the likelihood of payroll fraud and/or error at the Hangout Restaurant Company. Because of Aaron’s recent findings in relation to the operations of the Seal Beach Hangout Restaurant, he does not want the Restaurant Managers to know that he is having the payroll records checked. Susan has access to all the files and she provides you with the master files and the latest fortnightly payroll information for the week ending 15 September 2017. Once again, you have been assigned responsibility for reporting the audit findings to the Audit Partner, Maxwell Smart. ACC5218 In planning your audit of the payroll for the period ending 15 September 2017, you have established the following audit objectives: 1. Audit Assertion – Accuracy; Occurrence: Produce a report showing the employee number, full name, work department, pay date, pay per period, and cheque number for each paid employee. Sort and subtotal this report by work department. 2. Audit Assertion – Completeness; Posting & Summarisation: Produce a report, using the pay details in the employee master file and the payroll file, to check the totals for both files. 3. Audit Assertion – Occurrence: Produce a report that determines if any employees are being paid more than $3,000 pay per fortnight. The report will detail these employees with full details including their name, work department and job description and pay per period. Sort this report by work department. 4. Audit Assurance – Accuracy; Completeness: Produce a report showing the details of any employee that was not paid. 5. Audit Assurance – Completeness; Accuracy: Produce a report showing the pay details for any paid employee who is not on the employee master file. 6. Using ALL the issues that any report reveals, identify and briefly discuss any issues that suggest the possibility of fraud in payroll. 7. Recommend key audit tests that you would undertake to evaluate the internal controls relating to payroll expenses of the company. ACC5218 8. Having carried out your recommended audit procedures, identify potential weaknesses, if any, in the internal controls relating to the company’s payroll. Recommend, with reasoning, how internal controls might be strengthened such that the possibility of fraud in payroll is reduced.

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