Jacksonville Jaguars Spot® e-Cash Card:

Evaluating IT Benefits and Risks;

Identifying Assurance Services Opportunities1

LEARNING OBJECTIVES Identify benefits, costs and risks to businesses from implementing information

technologies Determine how CPAs can provide assurance about processes designed to reduce

risks created when new IT systems are introduced

Understand ways CPAs can identify new assurance services opportunities (i.e., new areas for revenue generation)

INTRODUCTION

The Jacksonville Jaguars National Football League (NFL) team is taking advantage of electronic payments technologies in the sale of stadium snacks and souvenirs. At Alltel Stadium where the Jaguars play their home games, football fans can use Spot Cards to pur-chase soft drinks, beer, popcorn, and Jaguar souvenirs rather than fumble for cash and change when making their purchases.1

The Spot Card offers both benefits and costs to fans in the stadium. The use of electronic payment technologies offers advantages for snack and souvenir vendors by providing better information for monitoring their businesses. Although electronic payment technologies offer improvements for the fans and vendors, those who rely on the Spot Card to process sales need assurance that the technology and related information produced is accurate and reliable.

BACKGROUND

The implementation of the Spot Card at the stadium in Jacksonville represents one of the first uses of that type of electronic payment technology in a major sports stadium. The stadium contracted with First Union Bank, based in Charlotte, North Carolina, to develop and implement the Spot Card system. First Union contracted with Diebold Incorporated of Canton, Ohio, which manufactures card-based transaction systems, to

1 This case was prepared by Frank A. Buckless, Ph.D. and Mark S. Beasley, Ph.D. of North Carolina State University and Steven M. Glover, Ph.D. and Douglas F. Prawitt, Ph.D. of Brigham Young University, as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of an administrative situation. 'Many of the facts about the Spot Card system are based on an article titled "Jacksonville Jaguars Fans Score Big with Smart Cards" by Maura McEnaney that appeared in EC World, January 1998, pp. 24-27. This case was revised and updated by Chris Westland

develop the Spot Card system.

Customers purchase Spot Cards in various denominations such as $20, $50, and $100. ATM-like machines in the stadium allow fans to transfer funds from their bank or credit card onto an electronic chip on the Spot Card. Fans also can buy cards with cash. Other terminals also are located in various First Union branches around Jacksonville. Card readers located throughout the stadium allow fans to check the balances remaining on their cards.

Fans purchasing snacks and souvenirs present their Spot Card to vendors at concession and souvenir stands, who calculate sales amounts and swipe the cards through point-of-sale (POS) machines. Software tracks each transaction for vendors. Before the transaction is complete, fans review the amount to be deducted and punch the "Yes" key on the POS machine. At that point, the POS device deducts the purchase amount from the chip-embedded balance on the fan's Spot Card. These cards can also be used at battery-operated POS computers carried by vendors who roam the stadium stands selling merchandise during the game.

The POS machines capture information about each transaction. The system records the card number, location code, and the date and time of the transaction, as well as the items sold. That information is later summarized for vendors.

Once the game is over, vendors link their POS machines to a network that allows the transfer of data stored on each POS machine to a computer located in the stadium counting room. After all the data are downloaded to that computer, the information is then transmitted to a host computer at First Union Bank in Jacksonville. The host com-puter uses the data transmitted to settle that day's sales with each vendor in the stadium. The host computer produces various reports, which provide vendors detailed information to track sales volume for specific products in specific sections of the stadium.

First Union Bank receives a fee from every Spot Card transaction, and the bank collects whatever remains on an unused Spot Card at the end of two years. First Union also sells player-signature Spot Cards with pictures of selected Jaguar players on the front for an additional fee.

Other stadiums around the country, such as the Charlotte Panthers' stadium in North Carolina, have started to use similar technologies. As fans grow more accustomed to the use of transaction cards like the Spot Card, there will undoubtedly be expanded opportunities for using the cards to pay for stadium parking or merchandise and promotions outside stadiums.

OPPORTUNITIES FOR CPAs TO PROVIDE ASSURANCE

The American Institute of Certified Public Accountants' (AICPA) Special Committee on Assurance Services recently developed new CPA "assurance services" opportunities. These new services are designed to allow CPAs to provide assurance about the reliability and relevance of information decision-makers use to run their businesses.

Certain forms of assurance services have always been performed by CPAs. For

example, auditors of historical financial statements provide assurance about whether those financial statements are in conformity with generally accepted accounting princi-ples (GAAP). Continuous changes in IT will provide new opportunities for CPAs to provide assurance regarding the accuracy, reliability, and relevance of information produced by these technologies. Organizations will have greater need for assurance on systems and controls as IT continues to play a larger role in business.

One of the opportunities proposed for CPAs by the AICPA's Special Committee on Assurance Services relates to IT Systems Reliability Assurance. In these engagements, CPAs can provide users with assurance that an IT system has been properly designed and produces reliable data. In doing so, CPAs might test the integrity of an information system by analyzing sample IT output for accuracy. Assurance providers can also provide valuable services to help organizations determine whether systems are secure and whether adequate contingency plans are in place in the event of system failure or disaster.

As First Union and its competitors attempt to market Spot Card technologies to other stadiums and businesses, there maybe opportunities for CPAs to provide assurance that the processes related to this technology produce accurate and reliable information. Providers, such as First Union, can then use the assurance to better market their products.

Practicum

1. Summarize in your own words the definition of ‘assurance services’

2. The use of electronic payment technology offers particular benefits and costs. What benefits and costs does the use of Spot Cards offer to Jaguar stadium snack and souvenir vendors? What are the benefits and costs for the fans in the stadium? What are the benefits and costs to First Union?

3. Although the Spot Card offers several benefits, the use of IT to process snack and souvenir transactions does create new risks. Identify risks for the vendors, customers, and the bank

4. What control processes could the stadium and First Union implement to help reduce these risks?

5. How might CPAs be able to structure an assurance services engagement to assure stadium vendors that information processed through the Spot Card system is reliable? What kind of information could the CPA examine and eval -uate in order to assure stadium vendors that they can reasonably rely on the Spot Card system to conduct business?