McDonalds Singapore

Audit Report
Amelia Mulyani (12768540)
Ninke Yulistia (12780161)
Ploy Waritha Waikakul (12758001)

JAMES CO
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>Introduction
McDonalds Restaurant Pte Ltd. (after this will be addressed as Mcdonalds Singapore) is one of McDonalds Corporation
USAs franchises. Officially entered Singapore market in 1970, now McDonalds Singapore has received many
prestigious awards, such as Leading HR Practices in Talent Management, Retention & Succession Planning Award 2008
and Corporate Human Resources Awards 2008 (McDonalds Corporation, 2008), proving the quality of this strong
brand worldwidely.


The Background of The Observation of McDonalds Singapore
What does to observe or doing observation mean according to Advanced Safety Audit regulations or Auditing Standard?
To observe means to look for certain procedures or processes being performed by another party (ASA 500 par. A17).

To avoid misappropriation of assets, it is important for an auditor to conduct a visual observation in order to collect the
evidence needed and therefore, give a reasonable assurance to the client. However, as ASA 500 par. A17 about
observation further explained, observation (in this case, visual observation) is limited to the point in which the
observation takes place, and by the fact that the act of being observed might affect how the system normally
performs.


Further Details of McDonalds Visual Observation
Visual observations took place at McDonalds Ang Mo Kio Ave 3 (address: 51 Ang Mo Kio Ave. 3, Singapore 569922 and
conducted at three different dates and three different times.
First observation ! April 7, 2014 during lunch time (12.30 PM until 2 PM).
Second observation ! April 20, 2014 after dinner time (8 PM until 10 PM).
Third observation ! April 21, 2014 during breakfast time ( 10.30 AM).
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>What do we observe?
In doing our job as junior external auditor and to gain our purpose to understand the environment of McDonalds
Singapore (AMK Ave 3 branch) internal control, we carefully select three main things we were planning to observe.


Segregation of Duties
24 hours and 7 days operation of McDonalds Ang Mo Kio Ave 3, how is the management able to manage the shifts of
so many employees without any or minimum clashes happened during the process? What does the color of the
uniform each employee wear? How does the manager keep her eyes on although the chamber whilst the inventory is
kept was left without any special supervision?

A good segregation of duties is one of the key succeed of a low control risk over a company as big as McDonalds
Singapore. Although, many people go to McDonalds, the staffs always serve the customers quite fast and in order.


IT System
McDonalds is well known of their high level of performance, not only in Singapore but also around the world. They
almost have 0% of mistake on their management information system. Besides that, McDonalds Singapore also has an
excellent delivery services. The delivery service belongs to McDonalds also is extremely user friendly. Hence, we expect
that McDonalds has a good IT system, because how IT system works will determine how smooth the chart flows on the
whole process of sales and cash handling. For instance, the software that they use daily to take the orders of customers
and then provide them a multiple forms of payment.


Cash Handling
Cash handling is one of the most important system because it generally involves of money, which is critical to any
organizations. How well McDonalds Ang Mo Kio Ave 3 handling their cash? How often they collect their petty cash on
daily basis? We expect that McDonalds also have a good transaction processing system (TPS) as they have minimum
complaints over changes given to the customers.
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>Report of Factual Findings
To Senior Auditor, James Co Audit Firms


Report of Factual Findings
We have performed the procedures agreed with you to report factual findings for the purpose of avoiding such
misappropriation of assets happened with McDonalds Singapore (Ang Mo Kio Ave 3 branch) and therefore to gain a
deep understanding over McDonalds Singapore internal control. The procedures agreed is visual auditing observation
as many as three times in three different times to find out how well the cash sales performance of McDonalds Ang Mo
Kio Ave 3.


Assurance Practitioners Responsibility & Independence
It has been our responsibility to report what do we find during our visual observations. We did our observations
according to Advanced Safety Auditing Regulations (ASA) 500 par. A10 and par. A17. Nonetheless, as the procedure
agreed does not establish any assurances, we do not express any conclusion and provide no assurance on the agreed
audit subjects listed on the actual findings.

We also kept our independence level as we did our visual observations.


Factual Findings
Listed below are our audit subjects agreed and our factual findings:
Segregation of duties
We found that there is a clear segregation of duties in McDonalds Ang Mo Kio Ave 3 as we could clearly seen
there are differences of the colors of uniforms the employees wear. Those differences are:
" Bow ties and pin.
Those who are assigned to be working in the higher level of management. All employees who
wear bow ties often see managing and make sure all the orders placed to the customers correct
" Red color uniform.
They who were mostly seen standing as the workers in the kitchen and do the cleaning
" Purple color uniform
The person in charge for McCafe section
" Other colors.
Such as dark blue and grey; sometimes seen behind the cashier desk or supervised the kitchen
section.

We also found that there is no different between full-time workers and part-time workers as we only left on
assumptions based on how old the workers are. As we compared to its competitor such as Burger King, the
segregation of duties were not as clear as McDonalds (they do not differentiate the workers uniforms).
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IT System
During the lunch time, we could observe how busy McDonalds was to place all orders of the customers
queueing up. Yet, the business did not affect the accuracy of how McDonalds placed customers orders and
additionally, in a quick pace.

We found that the time the customers ordered, the food and beverages orders showed up on the screens
placed along the kitchen where all the workers made as the standards of the food they need to make. Not
only food and beverages, but they could also cancel the orders placed by customer, even after the receipt
was given out, by only destroying the receipt as the purchase evidence and renew the order in the
computer.

Unfortunately, there is still no evudences of how they marked the orders already made and given to the
customers.

Cash handling system
Regrettably, besides the fact that they have 100% accuracy when handling out the changes to the
customers, we could not obtain any real findings of how often they collect the petty cash although we came
not during their peak hour (after dinner time). This might also be affected by the operation hours of
McDonalds Ang Mo Kio Ave 3.


We did not conduct any audit or examination procedures besides visual observations. This report is solely based on our
visual assumption could be seen during the observations. This report is intended only for the information and use of
James Co Audit Firms for the purpose to see whether there is any misappropriation of assets. Lastly, it is not intended ti
be and shall not be used by other than these specified parties.


Iw.o (ao (|. /a;/o |o vor/io
Amelia Mulyani Ninke Yulistia Ploy Waritha W.