This assignment is for you to be able to gain access to andperform some basic functions using the ACL software. In addition, it requires you toproduce an audit memorandum (2 pages maximum, using MS Word) to the auditpartner addressing the specified issues. ACL reports should accompany thismemorandum 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 andaddressing the specified issues. (Note: ACL reports should accompany thismemorandum 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 skillsin using the ACL software to produce the correct outputs to meet the assignmentobjectives.

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 providedwith this assignment for importing into ACL.

4. Import the Excel file into ACL. Refer to the ACL Analytics Documentation for moreinformation (ACL Analytics User Guide /Defining ACL tables / Defining MicrosoftExcel 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 excesssales commissions1, an anonymous complaint was received via the Fraud Hotline that isoperated independently by a third party. The caller provided information about situationswhen certain sales people were behaving unethically when soliciting business from theircustomers. She also pointed out that, while some of the sales reps were below theirquarterly quota (approx. 30,000/quarter), a few sales “superstars” were not onlysignificantly outperforming their peers but they were also bragging to their colleaguesabout receiving higher commissions.

When this information came in the external auditors happened to be onsite performingvarious tests in support of the Seattle Paper Products’ (SSP’s) financial audit. Theirwork related to the revenue cycle already resulted in them identifying certaindiscrepancies. Therefore, a decision has been made together with the client to expandthe scope of the existing engagement by including a series of tests for fraud risks. Youwere asked to contact the client, obtain the necessary information, perform the dataanalysis and present the findings to the audit partner.

The financial accounting software used by the company is fully integrated with the salesapplication that tracks individual sales invoice information, commission rates, etc.Francesca McKenzie, the manager of the sales team and the sales applicationadministrator provided you with the latest sales report for the February 1, 2016 – July29, 2016 period. You also received the Aged A/R report as of the end of July 2016 fromaccounting.

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

Additional information:

• The balance of the accounts receivable account at the end of the previous fiscalyear 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 asuncollectible.

• The product sold to SUPERTITE SAM, S.A. on April 22, 2016 was returned toSSP’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 itand provide a logical argumentation and supporting evidence for conclusionspresented in the audit memorandum. For example, you should provide a seriesof scenarios that could have resulted in the fraud being perpetuated by specificemployees of the organization being audited.

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

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