EXECUTIVE SUMMARY

For over 40 years, SHAKEY'S PIZZA ASIA VENTURES INC. has been creating good times
and great memories in the Philippines. Shakey’s now operates nationwide with a strong store
count of 177 stores, comprising of 106 Company-owned stores and 71 franchised stores.
Shakey’s is one of the leading operators of Fast Casual Restaurants in the Philippines, focused on
family casual dining. They operate several store formats including legacy, free standing, strip
mall, mall, and other stores.

Shakey’s target market consists of the A, B, and upper C income class segments that prefer full-
dining restaurants over fast-food establishments. Shakey’s attracts families and groups through
its meal bundle offerings and party-size portions that are ideal for sharing. Shakey’s believes its
superior value arises from its ability to serves its guests with differentiated menu offerings and
high-quality products. Their iconic chicken n’ mojos and world famous original thin crust pizza
appeal to customers across all ages, demographics and various income levels. It also offers its
products in bundled “Family Deals” that are ideal for sharing.

To sum it up, Shakey’s aims to provide good times and great memories while maintaining their
vision to be the leading and preferred Family Casual Dining Restaurant, serving pizza as its core
product.

With over 40 years of delivering superb and outstanding quality services to its valuable
customers, Shakey’s Pizza Asia Ventures has been able to garner and achieve countless of
awards and accomplishments. Recently, in 2016, it has launched its IPO – Initial Public Offering,
with an offer price of Php 11.26. It offered 306 million common shares with an over-allotment
option of up to 45,900,000 common shares. It is now currently the market leader in the Pizza
Industry. Back in 2007 and 2008, it has won a “Franchise Excellence Award – Outstanding
Filipino Franchise”. This is a platform that recognizes the country’s best-managed companies
which are benchmarks for all franchising businesses. On top of that, it has also been awarded the
“Grand Award” which is given to restaurants that show an uncompromising and passionate
devotion to the quality of their food programs. From 2010-2016, it has been consistently in the
Top 1 spot in “The Best Pizza Chain – Philippines”. These are only some of the reasons that
prove why Shakey’s Pizza Asia Ventures is a front-runner in the food and beverage industry.

Findings discovered during our audit were as follows:

1.) The company’s cash receipts from operations were not deposited daily which is a
violation of an accepted standard that cash receipts should be deposited daily or on the
next banking day. These were kept in a vault in each branch and only deposited every
Monday of the week due to the unavailability of the company’s depositor. This made it
susceptible to theft which may ultimately lead to cash shortage.
Recommendation: The company should have an agreement with the bank or a third
party to pick up the cash receipts at site daily to be deposited intact.
 2.) The company’s cash receipts from a particular branch were commingled with cash
receipts from other branches before depositing it. The amount indicated in the bank
deposit slip was the total amount of cash receipts of all branches. This is because the
company has only one depositor who collects all cash receipts from all branches and
deposits them together. This may cause difficulty in determining the actual cash deposits
per branch and loss of an audit trail.
Recommendation: Each branch should have a different bank account where cash
deposits should be made to determine the actual amount deposited per branch for
reconciliation and audit trail purposes.

3.) Because the company was unaware that deletion reports were automatically deleted after
10 days, it does not maintain the point-of-sales deletion reports for more than 10 days
which would have maintained an audit trail and allowed the inappropriately deleted
restaurant transaction to be reviewed. This can ultimately reduce the revenue reported.
Recommendation: The accounting department in the main office should print daily the
deletion reports to maintain documentations for future uses.

4.) The branches frequently experience stock outs of certain inventory food items. This is
due to the company’s lack of a reorder point. Usually, they just depend on the chef’s
judgment when to restock the inventory items. This can lead to foregone sales.
Recommendation: The company should establish a concrete reorder point that will be
embodied in their system that could automatically prompt the purchasing department to
restock the inventory food items.

5.) Because the company wasn’t aware of the segregation of duties principle in the payroll
system, it made the payroll clerk as the paymaster. With this, the payroll clerk can
actually create ghost employees and pocket the fictitious pay which tantamount to theft.
Recommendation: The company should assign another employee other than the payroll
clerk to act as the paymaster. This would prevent the creation of ghost employees.

6.) Branches have a high number of incorrect orders taken because they don’t have proper
protocols that employees should do when taking customers’ orders. Orders should be
verified and confirmed before forwarding them to the kitchen because it can ultimately
cause loss from wasted orders.
Recommendation: The company should establish protocols that employees should do
when taking the orders like repeating the orders taken and closely verifying them.

This engagement would not be possible without the dedication and efforts of the parties
involved. We would like to thank our client, Shakey’s Pizza Asia Ventures Inc. for their
invaluable contribution and cooperation during the entire engagement. We would also like to
extend our deep gratitude to the lawyers who cleared out all the misunderstandings regarding
certain legal matters, to the engineers who helped properly track and report the client’s use of
resources, especially their fixed assets, and to the actuaries and appraisers who assisted in the
valuation of the client’s risks and properties. We would also like to thank all those persons who
contributed and devoted their time for the success of this engagement.

Reported by: Amores, Patricia Libato, Lindsey Quisaot, Noc

Ang, Kleah Ochea, Justine Rockwell, Richmond
Angeles, Christine Oflas, Mary Ygnacio, JP
Blanco, Katrina Po, Stewart