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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.

  1. How did the cashier endeavor to conceal the robbery?
  2. Based on the scenario alone, name two specific components of internal control that were seemingly missing.
  3. 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.

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