CSU Fraud in the Bank Reconciliation Research Paper
Option #2: Fraud in the Bank Reconciliation
Poor internal control over its cash transactions are becoming a problem for the Johnson Company. The following are facts about its cash position on August 31:
- The company’s books showed a balance of $ 19,029.97, which included undeposited receipts.
- A credit of $300 on the bank statement is not included in the company’s books.
The bank statement’s balance was $ 15,347.45.
- Outstanding checks were:
|
Check Number |
Amount |
|
No. 255 for No. 289 for No. 292 for No. 8511 for No. 8632 for No. 8719 for |
$116.25 $130.00 $253.25 $170.71 $206.80 $125.28 |
The only deposit was for $3,885.31 on September 7. The cashier personally handles all incoming cash and bank deposits. He is responsible for reconciling the monthly bank statement as well. The September 30 reconciliation:
Balance per books, August 31: $19,029.97
Add: Outstanding Checks
|
Check Number |
Amount |
|
8511 8632 8719 Check totals Total |
$ 70.71 $106.80 $ 25.28 $ 202.79 $19,232.76 |
|
Balances |
Amount |
|
Less Undeposited Receipts Balance per Bank, August 31 Deduct Unrecorded credit True Cash, August 31 |
$ 3,885.31 $ 15,347.45 $ 300.00 $15,047.45 |
Requirements:
You are suspicious that the cashier may have pocketed some money and suspect that some of the un-deposited receipts of $3,885.31 may have been taken. Create a schedule presenting your estimate of the loss.
- How did the cashier endeavor to conceal the robbery?
- Based on the scenario alone, name two specific components of internal control that were seemingly missing.
- If the cashier’s August 31 reconciliation is known to be accurate and you start your audit on October 10, what specific substantive audit procedures would help you detect the missing money?
Your written response paper should be 3-4 pages in length. Please type your response in a Word document and follow APA format, according to CSU Global Writing Center (Links to an external site.). Include a title page and reference page. Use two (2) outside academic sources other than the textbook, course materials, or other information provided as part of the course materials.
