Triangle Ball Club: A Forensic Analysis

Daniel SimonJustan Bristow

Jessica GreenbergWilliam Mosconi

Minor League Baseball Overview

• Promotes local community business• Focuses on both entertainment and sport aspects• Declining Industry• Revenues: Ticket Sales, Parking, Programs,

Concessions, Promotional Fundraising

Assignment • We are CPA’s hired to audit the books of TBC

• Team owner Franklin Kennedy wants to investigate the possibility of fraud

The Characters• Phil Ackers

o Presidento Liason with owner, fundraising and operations o Was previously suspected of tax evasion

• Terri Hughes o Assistant to Phil Ackers o Worked with Phil previouslyo Guards his office “like Fort Knox”

The Characters • Ben Hill

o Office Manager o Filed for bankruptcy four months ago o Has many financial transaction-based responsibilities

• Candie Harris o Secretary to Ben Hillo Dislikes Ben o Recently purchased a new motorcycle

The Characters • Tucker Johnson

o General Manager o Former ballplayer with seven kids

• Michelle Shelton o Accounting clerko Her uncle is Tucker Johnsono Works directly under Ben in all accounting responsibilities

Operations Overview• Equipment Purchases

o Originate with Tucker Johnsono Ben Hill chooses vendor

• Just chose new one that he is quite close with o Reports and orders are checked and verified between Michelle

and Ben

• Concessionso Holly Hope o Cash-based o Money is counted by Michelle and Beno Either Ben, Terri, or Phil deposit money

Operations Overview Continued

• Parkingo 5 employeeso Cash-basedo Verifies cash with number of sold tickets

• Payrollo Subcontracted to ADP Payroll Serviceso Paid bi-monthly except game day employeeso Candie creates timesheet, Ben Hill verifies her numbers and

sends to ADP

Operations Overview Continued

• Promotions (fundraising)o Phil Ackers hosts promotional activities throughout Southeastern USo Phil returns all trip expense receipts to Terri Hughes who verifies and

forwards receipts to Michelleo Ben Hill deposits promotional receipts

• Ticket Saleso Three elderly women run the ticket bootho Only accept cash or checkso Ben and Myrna recount money and verify ticket logo At end of night, Ben is responsible for taking ticket log and cash back to

his office

First Glance Suspicions

• Ben Hillo Has too much autonomy- tyrant leadero No system of checks and balanceso Is constantly the last person to handle casho Relationships with Michelle and Candie raise

suspicionso Over sees all day-to-day activitieso Over bearing boss

Concession Revenue Tracking

  Concession Revenue COGS Rev HB HD POP PN Soda Beer Cond  Chechbook $4.00 $3.00 $2.00 $2.00 $1.00 $4.00 $0.00

2-Apr $7,920.00 $7,920.00 440 660 440 330 880 440 10003-Apr $9,360.00 $10,465.00 $9,360.00 520 780 520 390 1040 520 12004-Apr $8,873.00 $8,873.00 492 738 502 380 987 485 1300

25-Apr $5,739.00 $5,739.00 311 461 352 204 752 312 026-Apr $12,238.00 $5,685.00 $12,238.00 672 1024 682 512 1362 682 0

13-May $9,720.00 $9,720.00 540 810 540 405 1080 540 150014-May $8,259.00 $13,130.00 $8,259.00 482 725 475 362 982 375 015-May $13,595.00 $13,595.00 689 1256 777 548 1521 725 0

6-Jun $12,482.00 $15,690.00 $12,482.00 722 1108 752 544 1322 589 15007-Jun $13,171.00 $13,171.00 752 1202 772 571 1523 587 15008-Jun $11,346.00 $11,346.00 630 945 630 473 1265 630 1500

25-Jun $7,569.00 $7,625.00 $7,569.00 441 662 445 332 885 345 100026-Jun $5,339.00 $5,339.00 296 445 298 224 592 296 027-Jun $9,772.00 $9,772.00 560 842 562 421 1124 479 010-Jul $14,342.00 $14,342.00 760 1140 658 782 1802 800 200011-Jul $12,602.00 $5,765.00 $12,602.00 700 1050 700 525 1402 700 0

     $162,327.00     $162,327.00              

Analysis• Checkbook Deposit and Revenues add up• We observed lack of information, however,

about concession purchaseso Total COGS is shown and cost breakdown is given, yet specific

quantities of purchased concessions are not giveno Without specific quantities of products purchased (all with

different profit margins), specific profit and revenue cannot be accurately reported

Ticket Revenue  Tciket Revenue   St Sold Balc dis St Dis Bal   Revenue  $12.00 $7.00 $9.60 $5.60  

2-Apr $24,400.00 1800 400 0 0 $24,400.003-Apr $28,200.00 2000 600 0 0 $28,200.004-Apr $26,150.00 1800 650 0 0 $26,150.0025-Apr $15,850.00 1000 550 0 0 $15,850.0026-Apr $35,296.00 2358 1000 0 0 $35,296.0013-May $28,850.00 1900 550 200 50 $28,850.0014-May $25,300.00 1700 700 0 0 $25,300.0015-May $38,652.00 2640 996 0 0 $38,652.006-Jun $37,700.00 2500 1100 0 0 $37,700.007-Jun $40,088.20 2725 775 194 18 $40,088.208-Jun $34,050.00 2400 750 0 0 $34,050.0025-Jun $23,900.00 1700 500 0 0 $23,900.0026-Jun $15,360.00 1000 480 0 0 $15,360.0027-Jun $29,600.00 2000 800 0 0 $29,600.0010-Jul $40,205.00 2650 975 150 25 $40,205.0011-Jul $36,049.00 2559 763 0 0 $36,049.00

     $479,650.20             $479,650.20

Ticket Revenue Transaction Faults

• Ben controls the cash count at the end of the games, submits the log, and deposits the money

• Revenues add up, however, there is no double check as to tickets and it is all cash & checks

• Ticket sales have a very old-fashioned approach

Further Investigation• Concessions- Analyze concession order

summaries to understand quantities of purchased concessions

• Tickets- Implement a standard transaction check.o Have the President sign off on all sales at the end of each

game and/or series

Payroll Fraud• While observing the payroll payments we found

discrepancies in the payroll invoices from ADP

• Salaried employees are paid directly into their bank accounts, however, the temporary game day employees are paid by check

• Game day employees are paid after each home games series and the rest of employees are paid bi-weekly

Payroll Fraud• Each employee’s time card is signed by his or her

supervisor and co-signed by the person in the front office responsible for that division

• Ben and Candie are the only ones in the office responsible for

verifying the numbers and names before they are sent to ADP

• Ben and Michelle are the only people who verify the payments after ADP sends them, which is done when they

reimburse ADP

Payroll Fraud• There are no problems with the direct deposits to

the office workers and baseball players

• The ADP payroll invoice and Candie’s game day employee timesheet do not reconcile

• In both sending and receiving from ADP Ben is the only employee that is responsible for signing off on the numbers

• There is no oversight for this process within the company

Payroll Fraud  6-Apr 28-Apr 17-May 10-Jun 29-Jun 13-Jul

ADP Payroll Invoice $1,648.50 $1,118.25 $1,680.50 $1,701.63 $1,705.75 $1,143.50

Candie's timesheet $1,546.50 $938.25 $1,500.50 $1,518.63 $1,525.75 $963.50

             

Discrepency $102.00 $180.00 $180.00 $183.01 $180.00 $180.00

             

Total Missing $1,005.01          

• We found a total of $1,005.01 of unaccounted Payments to ADP for employees that do not exist

Conclusion• There is a general lack of oversight throughout

the entire Triangle Ball Club• Equipment and Concession purchases are done

without supervision and there are many opportunities for fraud, Ben’s friend is the equipment contractor

• Ticket sales are very old fashioned there is no sales system and Ben and Myrna are the only ones accountable for the cash at the end of the day

• While the payroll fraud is the only one we can prove, the Triangle Ball club is filled with opportunities