CASE 3.1
THE TROLLEY DODGERS
Synopsis
In this brief case, a long-time and trusted employee of the Los Angeles Dodgers engaged in a
large scale payroll fraud to embezzle funds from the organization. Over a period of several years, this
The Trolley Dodgers—Key Facts
1. The top executives of the Dodgers organization apparently placed a great deal of trust in their
subordinates.
3. The Dodgers’ payroll system was not only supervised by Campos but had also been designed by
him.
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1. To identify key internal control issues for an organization’s payroll function.
Suggestions for Use
This case deals exclusively with an organization’s payroll function and thus would articulate well
with classroom coverage of the payroll transaction cycle. Alternatively, the case could be used to
1. An auditor’s principal objective in performing tests of controls on a payroll transaction cycle, as
with any transaction cycle, is to assess the level of control risk latent within that cycle. An auditor
assesses control risk for a transaction cycle to obtain the evidence needed to determine the nature,
extent, and timing of the year-end substantive tests to be applied to the account balances produced by
2. The following internal control weaknesses were apparent in the Dodgers’ payroll system:
a. the extent of control that one person had over the payroll system, which began with that
individual’s design of the system and included his involvement in the system’s operational
details,
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scheme.
3. Listed next are examples of audit tests that might have led to the discovery of Campos’
embezzlement scheme. [Note: The auditors who tested the Dodgers’ payroll transaction cycle
should have recognized that the control risk associated with that cycle was relatively high given the
fact that one person had almost complete responsibility for the payroll function—with very little
accompanying accountability. Such an assessment of control risk, ceteris paribus, should have