Triangle Ball Club: A Forensic Analysis

1. Triangle Ball Club: A Forensic Analysis Daniel Simon Justan Bristow Jessica Greenberg William Mosconi

2. 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

3. Assignment • We are CPA’s hired to audit the books of TBC • Team owner Franklin Kennedy wants to investigate the possibility of fraud

4. The Characters • Phil Ackers • President • Liason with owner, fundraising and operations • Was previously suspected of tax evasion • Terri Hughes • Assistant to Phil Ackers • Worked with Phil previously • Guards his office “like Fort Knox”

5. The Characters • Ben Hill • Office Manager • Filed for bankruptcy four months ago • Has many financial transaction-based responsibilities • Candie Harris • Secretary to Ben Hill • Dislikes Ben • Recently purchased a new motorcycle

6. The Characters • Tucker Johnson • General Manager • Former ballplayer with seven kids • Michelle Shelton • Accounting clerk • Her uncle is Tucker Johnson • Works directly under Ben in all accounting responsibilities

7. Operations Overview • Equipment Purchases • Originate with Tucker Johnson • Ben Hill chooses vendor • Just chose new one that he is quite close with • Reports and orders are checked and verified between Michelle and Ben • Concessions • Holly Hope • Cash-based • Money is counted by Michelle and Ben • Either Ben, Terri, or Phil deposit money

8. Operations Overview Continued • Parking • 5 employees • Cash-based • Verifies cash with number of sold tickets • Payroll • Subcontracted to ADP Payroll Services • Paid bi-monthly except game day employees • Candie creates timesheet, Ben Hill verifies her numbers and sends to ADP

9. Operations Overview Continued • Promotions (fundraising) • Phil Ackers hosts promotional activities throughout Southeastern US • Phil returns all trip expense receipts to Terri Hughes who verifies and forwards receipts to Michelle • Ben Hill deposits promotional receipts • Ticket Sales • Three elderly women run the ticket booth • Only accept cash or checks • Ben and Myrna recount money and verify ticket log • At end of night, Ben is responsible for taking ticket log and cash back to his office

10. First Glance Suspicions • Ben Hill • Has too much autonomy- tyrant leader • No system of checks and balances • Is constantly the last person to handle cash • Relationships with Michelle and Candie raise suspicions • Over sees all day-to-day activities • Over bearing boss

11. Concession Revenue Tracking

12. Analysis • Checkbook Deposit and Revenues add up • We observed lack of information, however, about concession purchases • Total COGS is shown and cost breakdown is given, yet specific quantities of purchased concessions are not given • Without specific quantities of products purchased (all with different profit margins), specific profit and revenue cannot be accurately reported

13. Ticket Revenue

14. 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

15. Further Investigation • Concessions- Analyze concession order summaries to understand quantities of purchased concessions • Tickets- Implement a standard transaction check. • Have the President sign off on all sales at the end of each game and/or series

16. 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

17. 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

18. 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

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

20. 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