Auditing DHL: Case Study on Fraud, Risk, and Control Procedures

This report is an analysis of the audit of Dudley Health Limited (DHL) by Samway Baker Fitzgerald. It begins with a memorandum addressing the fraud at Pellegrino Shores, a retirement village owned by DHL, where a senior staff member colluded with residents to commit fraud, leading to reputatio...Read More

0Solution to question 1:
Running head: Auditing
Auditing
Name of the Student-
Name of the University-
Author’s note-

1Auditing
Solution to question 1:
Memorandum
To: Jek Porkins( Audit Senior, DHL assignment)
From: Sam Gomez ( Audit Manager, Samway Baker Fitzgerald )
Topic: Advice of appropriate auditing assertions.
Dear Jek Porkins,
The memorandum is constructed in the context of enhancing to the case of Dudley Health
Limited (DHL) which possesses substitute departments such as Neville’s and it contain of
reserved hospital in Tamworth. However, here is a key scam is recognized in the Pellegrino
shores under DHL. The deception happened in the procedure of senior staff members yield secret
payments from people in courtesy to decrease their payments. Furthermore, the elder staff
member also consumes an admittance to the subdivision catalog in which all occupants’ personal
facts are recorded. In this, she also finished numerous rackets including hypothetical to update
room place changes for inhabitants in argument of money (Suomi & Järvinen, 2013). Along, she
also decreases the resident’s age of halt in command to suggestion of equal worth to other
resident in favor of huge amount. This scam, gets \exposed by the associated worker who
eavesdrops the high-ranking staff members conversing the cheat with a resident.
In context to the fraud at Pellegrino, it can be stated that status risk could be the business
danger that leaves a damaging impress over the kindness of firm. The character hazard has a
great impact inside which folks observe the undesirable about the firm which openly unfair their

2Auditing
deals or service consumption (Grant et al., 2014). Similarly, the case of Pallegrino obviously
portrayed the deception or false activity by the oldest staff associate. This case can consequence
in repute risk as individual notices the negative appearance about the Pallegrino hospital
facilities in the procedure that they care high dues for their amenities. These type of immoral
repetition result the firm in undesirable manner. However, this untrue activity can develop a
cause of character harm and it is signified that when goodwill of the firm tumbledown then it
became problematic for them to live for lengthier duration.
In context to explanation of department connected of Pallegrino shores, it dismisses to be
recognized that swindle give increase to the problematic in the explanation checking. This occur
in the procedure that due to older staff associate perform the deception work in period to present
the explanation or gather large quantity from populaces tend to generate the changes in version
(Kim & Lennon, 2013). It gives rise to unprincipled repetition in the reviewing report. Therefore,
the lowly auditing consequence leaves a negative influence on the firm doppelgänger for long
duration. So, it can be stated that Pallegrino shores con case most prospective to touch the
business maneuver or reputation on adverse manner.
Answer 2
(A)
As per the circumstance of St Neville’s, it is recognized that DHL internal audit element is
involved by swapping from Neville current patient revenue system to the DHL system. Here are
the stipulations of DHL system are as follows:-

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 There is great number of complaints from newly squared patients that the payment
invoice is line up to the medical fund and pensioner grant rates (Knechel & Salterio,
2016).
 There is a record of past patients which can be updated with the re-visit of patients.
 The system considered some patient fee invoices where for no motive they have payable
patients at a lower room rate than grasp on the rates folder.
Thus, these are some requirement of revenue system but it also includes numerous types of
problematic. So, if Neville switch towards DHL system then they incline to look lot of problem
due to DHL system comprise various grievances and complications.
In respect to this case, the regulator audit risk can be happened. In this audit, the mechanism
risk includes the inquiry in the correctness of quantity stated by firm worker in scheme. It also
combined the documentation of mistakes or responsibilities in journalism. So, this kind of audit
risk is much appropriate for the circumstance when Neville change to the DHL payment scheme
as this system comprise lots of problems and faults due to which patients have grumbles regards
to add the moreover custodies in their bill. This disgruntles them to superior degree (Cao et al.,
2015). So, the instance clearly reflects the mechanism audit risk in respect to low observing of
system disappointment to offer superiority customer amenities in the form of accurate calculation
of services and bid quick and worthy offering to them.
The control jeopardy major instigated by the poor planning or strategies and improper
internal control (Mack et al., 2018). These parts similarly arise in the DHL payment system in
which director does not brand proper preparation and plan to serve the correct bills to patients

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owed to which the fault in beaks making and incurring footage of enduring data in arrangement
frequently occurrence. It stretches rise to the undesirable influence on the firm repute.
(B)
The two questions for internal audit are that:-
How analysis is done in the reporting system of DHL payment system?
How documentation is done in auditing the report on Neville department?
(C)
In admiration to the circumstance of Neville, it is found that material scheme
organization audit strategy would be accepted as this checking procedure help to appraisal the
panels over software development, data dispensation and admission to computer schemes. This
repetition allows the auditor to advert any damage in the IT system aptitude to admission or
deliver precise evidence to users. However, this reviewing policy could also support the users to
not include any kind of false data into the scheme. Therefore, this auditing system would be
finest suitable for the Neville case as there is a problem of revenue system due to which there is a
high auditing risk (Chou, 2015). So, it can be solved with the aid of Information management
system audit strategy.
Question 3
Solution to question A
The key account balances laterally with proclamations risk that is related with Acuity
Vision’s preparations of disbursing its sales team comprise risk of incidence, wholeness, being,
privileges and obligations and assessment. Assessing the case of Acuity Vision Sales Team it has

5Auditing
been identified that the sales team established a fairly low wage, they also accept bonuses
founded on dollar values of the trades they made. The risk of incidence mostly rises because
dealings recognized in the monetary statements do not narrate to the object (Knechel & Salterio,
2016). This sort of danger mainly rises with Acuity vision's in terms of disbursing its sales lineup
include wages & salaries expenses which mostly ascend because the cost of salaries and wages
does not comprise in the staff. The jeopardy of wholeness with Acuity Vision mostly ascends
due to non-maintenance of declaration, which includes reporting and upholding the asset, equity,
and liabilities (Buolamwini & Gebru., 2018). Letdown to uphold the avowals it upsurges the risk
of non-maintenance of financial dealings as a result of which it growths the menace of liabilities
indoors the business (Hoffmann, Meyer-Brandis, & Svindland, 2016). Additionally, rights and
obligations along with loss of estimation also intensification within the organisation of Acuity
Visions.
Solution to question B
The exact issues that the organization needs to reflect in admiration to upholding a
skillful environment with DHL include providing dependable financial reporting to together
outside and interior stakeholders so that they can impression the processes of the organization.
Complying with all applicable regulations and laws in respect to minimize expenses of growing
overhead expenses along with controlling the rising taxation (Belás, Dvorský, Kubálek, &
Smrčka, 2018). Also, the DHL organization also wants to reflect the exact issues of
representative a promise to moral values and honesty. Subjects related to founding organizational
construction and expert control needs to be maintained so that the exact purposes of the
organisation can be achieved.

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Solution to question C
The efficiency of client payment challenging aids in refining the income payments and
make output records that the organisation usages in terms of improving the boundary founded on
the specific requirements of the business (Coulter, Kaplinsky, Lewis, & Warmington, 2016).
Refining customer payment also helps in cultivating the imbursement file generation because of
which reception input files becomes calmer. The welfares of end-to-end client payment testing
include quality pledge which helps in removes costly alterations of the payment substructure.
The customer sum testing also assistances in improving automatic reversion testing that recovers
the authentication of functionality within the organization. Finally, customer payment testing
benefits in improving future-proof payment hubs.
Question 4
(A)
Test Type of test Key assertion Reasonableness
of conclusion
Additional
audit
procedures
1 Automated regression testing Accuracy This test helps in
increases the
declaration of
validation of
afresh installed
payment hub in
terms of refining
the
functionalities.
Furthermore,
this test also
The additional
audit procedures
that might be
useful in this test
is valuation.
During the
valuation stage,
all the equities,
assets and
liabilities are
recorded at a

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helps in
calculate
animatedly and
the procedure
can be used over
and over again.
proper valuation.
2 Interoperability testing Completeness The process of
interoperability
testing
safeguards that
the payment
hub's
compatibility
with the current
system.
Future-proof
payment hubs
are the extra
audit procedures
that help in
examination
how the scheme
responds when
vaccinating
specific
messages
through
imitations.
(B)
Test Type of test Key assertion Reasonableness
of conclusion
Additional
audit
procedures
1 Automated regression testing Completeness This is the
declaration
which
intelligences
about assets,
liabilities and
fairness
Payment file
validation is the
additional audit
procedures that
might be used
within the
process.

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equilibriums that
have been stated.
2 Interoperability testing Rights and
obligations
This assertion
situations that
the unit has the
privileges to the
assets which it
keeps and is
indebted under
its reported
liabilities.
Validating of
input and output
records can be
the additional
audit events
during this
procedure.
(C)
Test Type of test Key assertion Reasonableness
of conclusion
Additional
audit
procedures
1 Automated regression testing Understandability This is the
avowal where
the data is
included in the
financial
statements and is
obtainable
understandably.
Automation
extra audit
actions are
considered
which helps in
manual
validation results
in very long test
cycles.
2 Interoperability testing Occurrence This assertion is
used for revealed
transactions that
have occurred
within the
The modern
payment systems
can be used as
extra inspection
events in terms

9Auditing
procedure. of founding
payments as well
as new product
introductions.
(D)
Test Type of test Key assertion Reasonableness
of conclusion
Additional
audit
procedures
1 Automated regression testing Classifications The
classification
assertion is that
which helps the
business to
record the
accounts in the
general ledger
system.
Hosted payment
gateway system
which guides the
clients from an
e-commerce
location to entry
connection
during the
payment
procedure.
2 Interoperability testing Cutoffs This assertion
welfares in
footage all the
dealings
withinmthe
precise reporting
age.
The shared
payment
gateway can be
used as added
audit procedures
which helps in
dispensation
payments of
customers.

10Auditing
Question 5
The key assertions that are at risk regarding the imbursement of energetically at
Pellegrino shores are accuracy and completeness. The accuracy risk that mainly rises within the
Pellegrino shores includes failure to record transactions that need to be maintained accurately at
their appropriate amounts (Coghlan. 2019). Furthermore, this risk also includes mainly because
of salaries and wage costs that have not been calculated accurately, moreover, the organisation
also nose-dives to make any changes such as tax deductions because the sources have not been
accounted for and reconciled. Furthermore, another risk that has been noticed concerning the
payment of overtime at Pellegrino Shores includes failure to document the transactions that have
been recognized in the financial statements that relate to the entity of the financial statements.
The risk that has been identified in this process also includes that salaries and wages do not
include the payroll cost of any unauthorized personnel (Wallstreetmojo, 2019). Moreover, the
auditor in Pellegrino shores also failed to include the procedure process along with time that
needs to carry out the process efficiently. The internal control and deductive internal control
system that could be used in terms of addressing the risk are using setting up master file data and
recording wages due. Setting up the master file data helps the organisation in recruiting robust
procedures in terms of recruiting new employees within the enterprise. Changes in the master file
data need to be performed by the staff who are independent of processing payroll. The wage
master file comprises details about the employees. Whereas, the recording wage due as the
detective internal control also helps in addressing the risk which includes identifying the
scenarios of the employees such as whether they have been paid based on hours they have
worked (Finkler, Smith, & Calabrese, 2018). Moreover, through this process the risk of overhead
expenses associated with the wages of the employees is also being calculated such as employee

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hourly degree, calculate payroll taxes. Furthermore, the organisation also uses the recording
wage due in terms of calculating the gross wages of the employees that are based on their
standard working which includes 40 hours. So, with this system the management list the
overtime work and revise the gross wage that can be helpful to calculate the wage system of the
employees.

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Reference list
Buolamwini, J., & Gebru, T. (2018, January). Gender shades: Intersectional accuracy disparities
in commercial gender classification. In Conference on fairness, accountability and
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Caicedo, S., Lucas Jr, R. E., & Rossi-Hansberg, E. (2019). Learning, career paths, and the
distribution of wages. American Economic Journal: Macroeconomics, 11(1), 49-88.
Coghlan, D. (2019). Doing action research in your own organization. SAGE Publications
Limited.
Cullen, Z., & Perez-Truglia, R. (2018). How much does your boss make? the effects of salary
comparisons (No. w24841). National Bureau of Economic Research.
Hu, Y., & Shiu, J. L. (2018). Nonparametric identification using instrumental variables:
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Mack, M. J., Leon, M. B., Thourani, V. H., Makkar, R., Kodali, S. K., Russo, M., ... & Leipsic, J.
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risk patients. New England Journal of Medicine, 380(18), 1695-1705.
Mack, M. J., Leon, M. B., Thourani, V. H., Makkar, R., Kodali, S. K., Russo, M., ... & Leipsic, J.
(2019). Transcatheter aortic-valve replacement with a balloon-expandable valve in low-
risk patients. New England Journal of Medicine, 380(18), 1695-1705.
Mounk, Y. (2018). The people vs. democracy: Why our freedom is in danger and how to save it.
Harvard University Press.

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Traina, J. (2018). Is aggregate market power increasing? production trends using financial
statements. Production Trends Using Financial Statements (February 8, 2018).