Engagement Virgo Auditing Firm

team Monzon, Hannah Mae S.

Bartolome, Bea Alizzon H.
Daquigan, TJ Christian
Estrella, Jericho E.
Figueroa, Ana Chrizel C.
Audit Client Jollibee Foods Corporation (Xentro Mall Malolos Central Terminal Branch)
Audit Date For the year 2019
Standard Standards were measured in accordance with Philippine Standards on Auditing.

Risks Assessment

Class of Risk description Assertion Test of Control Suggestions

transaction affected
, account
balance or
disclosure
Cash The store manager of Accuracy, Inspection. Inspect Assign a different
Jollibee Xentro Mall Completeness daily deposit reports employee preparing
Branch is in charge of and compare these bank reconciliations
counting the drawer at the reports to both what is from the individual
end of the day and making deposited in the bank making deposits in the
deposits the next day. An and reports from the bank. The branch
individual doing both point of sale. should also prepare
leaves the branch
reconciliation of daily
vulnerable to theft between
deposit reports and
the period when they count
the drawer and deposit the point of sale reports
money. timely and without fail.
Random drawer
counts should also be
implemented to ensure
the correct amount of
money in the drawer.
Fixed The newly hired Valuation Observation and Provide employee
Assets bookkeeper has taken over inspection. Observe training and
the responsibility of the bookkeeper’s development and
recording fixed asset performance in perform fixed assets
depreciation for the first preparing financial audits on a regular
time. The bookkeeper has statements. Inspect basis.
demonstrated the reports from the
incompetence in recording
purchase of fixed
routine transactions
assets to approvals
appropriately.
and inclusion on the
financial statements.
Presentati A high-ranking officer of Occurrence Observation. Examine Conduct a series of
on and Jollibee Xentro Mall and rights and and observe the officer trainings for the entire
Disclosure Branch is in position to obligations, at work with management team
 dominate the decisions of Completeness, professional with courses focusing
the management team. Accuracy and skepticism. on required core
The Management Team of valuation competencies. Ask all
the said branch is known to members of the team
be weak. The officer is to present reports with
more likely to engage in full candor. If
unsuitable behavior. (This necessary, conduct an
is an example of a fraud investigation on
risk factor falling under dubious and
Nature of Control questionable records.
Environment - Dominion)
Cash and Jolly Workers' Union Existence, Enquiry and If proven so, urge the
Inventory (JWU), a Union of Jollibee Completeness, confirmation. Ask the management to
Xentro Mall employees, is Valuation and workers themselves if provide just
extremely unhappy with Allocation just compensation and compensation to its
the branch's imminent benefits are given. employees in
layoff and reduced From their reactions, conformity to what the
benefits. JWU's assess their level of law requires. A fair
dissatisfaction is a risk employer-employee
dissatisfaction and its
factor contributing to relationship relatively
relation to their
inclined fraud promises, if not fully
engagement. (This is an susceptibility and guarantee, less fraud
example of a fraud risk tendencies to do fraud. engagement.
factor falling under
Pressures -
Dissatisfaction)
Cash, Jollibee Xentro Mall failed Completeness Inspection. Perform an Communicate with a
Supplies to perform its regular tech inventory-check to security company
and maintenance. CCTV verify if actual specializing demand-
Inventory cameras in all areas are inventory matches the based; innovative,
suspected to be record. If there is a high-quality integrated
dysfunctional. All assets, discrepancy, an solutions on access
specially cash and examination of the control, intrusion,
inventories are physically intercom systems and
installed safeguards
exposed without stringent intelligent video
such as Closed Circuit
safeguards, they are more analysis systems. This
likely to be stolen. (This is Television (CCTV) would help the branch
an example of a fraud risk and the likes would be guard its assets from
factor falling under Nature necessary. theft or any fraudulent
of Control Environment - act, either internal or
Safeguard) external. A stringent,
regular inspection can
aid the management to
religiously monitor the
status of inventories
which may help
prevent loss of assets.
Inventory The cashier of Jollibee Occurrence Inquire, Observe and The Human Resource
Xentro Mall who is in and Inspect. The auditor Department must set
charge of the cash register Completeness must inquire about the up new employees
and taking the order of the insufficient number of that is enough to do all
customer is sometimes staffs. The auditor the work in the
also in charge of preparing must also observe restaurant and to
the customer's order. The how a staff performing contribute for the
same situation sometimes customer service
two interrelated duties
goes with the deliveries satisfactory in which it
result to poor
 wherein the delivery
person is the one who
prepares the orders to be
delivered. A staff
performing two interrelated
duties can result to poor
customer service and even
loss of inventory. For
instance, if the cashier has
a relation with the
customer, there is a
possibility that the cashier,
who also happens to be the
one that prepares the
order, might give the
customer more than what
he/she paid for.
Cash An employee or manager
of Jollibee Xentro Mall
having the only access with
the system of the cash
register is vulnerable to
fraud. Managers may
manipulate inventory or
steal funds by ringing up
orders and applying 100%
discount to them or when
the cashier asks the
manager to void an order.
customer service by will not cost the
observing how company too much.
satisfied a customer is. The HR Department
Lastly, the auditor must also have staffing
must inspect the strategies and proper
inventory and trace if division of duties that
the physical inventory emphasize on the
characteristics of the
count tally with the
employees,
company’s book.
recruitment and
selection process.
Accuracy, Observation and The entity must
Completeness, Inspection. The implement appropriate
and auditor must observe and active policies and
Occurrence the order procedure in procedures for hiring,
the cashier register training, evaluating,
and how a manager and promoting staff.
void or cancel orders. Set the expectation
The auditor must high for cashier and
inspect and examine managers. At the end
the documents and of each day,
records provided by transactions, even
the management if the void and over-ring
transactions are valid receipts must be
including the time reconciled with the
period if it matches cashier register.
from the records.

Payroll Responsibility to payroll of Accuracy The auditor must Segregation of

the Jollibee Xentro Mall inquire about the responsibilities, like
Branch is left with a single wages system inside setting up new
employee. The payroll and outside the entity. employees,
becomes susceptible to To ensure that the maintaining the
fabricating fictitious employees are paid system and generating
employee and generating accordingly for the checks, should be in
fraudulent payroll checks. work they done, practice. Payroll
It can also lead to observe the level of registers should be
misstatement of payroll supervision and reviewed and
due to overlooked payroll payoff approved by higher
timesheets and overtime. procedure. For management position
overtimes, review within the branch
overtime lists with before submitting for
authorized signatures. processing.
Observe wages pay
out and inspect
individual contracts of
employment in their
human resource in
order to ensure that
 only valid employees
are paid.
Inventory Fast foods like Jollibee Completeness The auditor must Provide more
have stockmen who are observe physical secu supervision to the
responsible for the rity of inventories and assets with high risk of
supplies used in the the environment in fraudulent activities
business. Susceptibility of which they are held. like inventory.
theft and fraud in inventory The auditor should
is also possible in this area also observe the
inventories count to
of the business. For
ensure that the count
example, the stockmen
has really existed and
can fabricate data to the procedures during
manipulate inventory of the the count are proper.
business.
Cash, Jollibee Xentro Mall lacks Completeness Observation. Observe To hire a personal
Supplies protection of its store and if the store doesn’t security guard for the
and especially the assets of the really need a personal Jollibee Branch for it
Inventory branch like cash which is security guard to serve doesn’t rely on the
the most accessible form of as its protection. Xentro Mall’s security
asset. Due to not having a Observe if the store guard which can be not
personal security guard of can rely through the available when an
Xentro Mall’s security incident happens at
the store aside from the
guard for months. the store, and also to
mall’s security guard, the
serve safeness to its
guarantee of the safeness customers aside from
of the assets is not that the store’s assets.
high and can be assumed
that the security of the
store is penetrable. And
also, every cash which
were received after a
purchase all goes to each
cash register machine in
which a cashier is
designated. It means that
all the cash which are
received that day prior to
the collection of that
particular cash is still
accessible and unsecured.
Inventory The inventory of the goods Completeness Observation and To have a just-in-time
of the Jollibee Xentro Mall Inspection. inventory (JIT
like ready-to-cook french Observation of which Inventory), by having
fries, burgers, nuggets, mostly will keep the inventory readily
chicken and etc. are number of inventories available to meet
stocked at their storage at good condition for demand with not that
room for their operations of the operations. And much excess and not
inspecting the also can cause a
business. Having a large
inventory records time shortage to its
amount of stock of these
to time if there are operations. Due to this
foods can lead to shortage or excess kind of inventory, the
spoilage/waste/scrap due to a receipt but not Jollibee Xentro Mall
because foods do have yet sold. can limit their inventory
expiration date or lifespan
unlike other goods.
at mostly to what the
operations only need
since delivery is too
easy only for Jollibee
branches since it’s a
big corporation and
avoid spoilage or
wasting of inventories,
misplacement of
inventories, shortage
of inventories due to
employees, to keep
track easily the
number of inventories
and also larger space
for the storage room
than having a tight
working place to move
around.