Are you able to gain access to and perform some basic functions using the ACL software?

This assignment is for you to be able to gain access to and
perform some basic functions using the ACL software. In addition, it requires you to
produce an audit memorandum (2 pages maximum, using MS Word) to the audit
partner addressing the specified issues. ACL reports should accompany this
memorandum in an appendix.

Assignment Details

Objective and Rationale

Given the importance that risk management plays in the life of most businesses today,
you are required to prepare an audit memorandum directed to the audit partner and
addressing the specified issues. (Note: ACL reports should accompany this
memorandum in an appendix.)
The main reason for this assignment is to test your ability to develop a high quality,
persuasive analysis report. You are also expected to demonstrate the appropriate skills
in using the ACL software to produce the correct outputs to meet the assignment
objectives.

Instructions

1. Review Integrative Case: Seattle Paper Products (pp. 322-323, pp. 338-339)

2. Read the additional information about the case provided in this document (see below).

3. Prepare the data contained in the SSP Data (Student version).xls Excel file provided
with this assignment for importing into ACL.

4. Import the Excel file into ACL. Refer to the ACL Analytics Documentation for more
information (ACL Analytics User Guide /Defining ACL tables / Defining Microsoft
Excel files).

5. Perform the required data analysis using ACL.

6. Print the report(s).

7. Write the memo.

Background information

Six months after Jason discovered the rate related coding error that resulted in excess
sales commissions1
, an anonymous complaint was received via the Fraud Hotline that is
operated independently by a third party. The caller provided information about situations
when certain sales people were behaving unethically when soliciting business from their
customers. She also pointed out that, while some of the sales reps were below their
quarterly quota (approx. 30,000/quarter), a few sales “superstars” were not only
significantly outperforming their peers but they were also bragging to their colleagues
about receiving higher commissions.

When this information came in the external auditors happened to be onsite performing
various tests in support of the Seattle Paper Products’ (SSP’s) financial audit. Their
work related to the revenue cycle already resulted in them identifying certain
discrepancies. Therefore, a decision has been made together with the client to expand
the scope of the existing engagement by including a series of tests for fraud risks. You
were asked to contact the client, obtain the necessary information, perform the data
analysis and present the findings to the audit partner.

The financial accounting software used by the company is fully integrated with the sales
application that tracks individual sales invoice information, commission rates, etc.
Francesca McKenzie, the manager of the sales team and the sales application
administrator provided you with the latest sales report for the February 1, 2016 – July
29, 2016 period. You also received the Aged A/R report as of the end of July 2016 from
accounting.

One of your colleagues, while working in her cubicle, overheard Francesca talking to
Nicholas Loh, one of the company’s sales “superstars”, and their discussion suggested
they may have a personal relationship.


Additional information:


• The balance of the accounts receivable account at the end of the previous fiscal
year was $254,500. The entire amount was owed by Bekaert N.V./S.A.

• The sale made to Bekaert N.V./S.A. on March 25, 2016 was written off as
uncollectible.

• The product sold to SUPERTITE SAM, S.A. on April 22, 2016 was returned to
SSP’s warehouse.

• The credit limit for JPC Creations SARL was recently increased to $1,000,000.


The following assumptions were made when calculating the tax deductions:

• Fiscal year start date: February 1, 2016.

• Total annual remuneration: $100,000

• Total annual commission expenses: $50,000

• No deductions were applied for commission amounts under $744.

Important reminders

• You should research online for information on sales commission fraud schemes,
and for sales and receivables fraud “red flags.”

• You are expected to identify the relevant information from the case, analyze it
and provide a logical argumentation and supporting evidence for conclusions
presented in the audit memorandum. For example, you should provide a series
of scenarios that could have resulted in the fraud being perpetuated by specific
employees of the organization being audited.

• Students who “go the extra mile” and identify all the errors in the report, use
different “tools” available within ACL, etc. and who provide a complete analysis of
those findings, will be rewarded with a higher mark.

• The document should be a typed professional written audit memorandum in
Word format with a 1.5 max line space, a suitable font such as Times Roman or
Calibri of 12 point maximum, and left, right, top, bottom margins of .8 inches
maximum. It should have the appropriate sections, and an overall summary and
conclusions, and it should be of maximum two (2) pages in length. Please make
sure you check it for grammar and spelling mistakes before handing it in.


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