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L13 Notes_Part_9 - Rapids On the branch account's records...

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© W.R. Knechel Kiting: Useful for conceal cash shortfall, covering an overdraft, or padding the cash account. A bond covenant restriction will be violated unless the current assets are higher. Fraudster decides to inflate cash at year end and plays the float for $10,000. Fraudster writes check on Podunk and deposits in Big City Podunk Big City Bank Bank 12/30/06 $100,000 $100,000 12/31/06 110,000 Balance $100,000 $200,000 1/5/07 10,000 1/7/07 (110,000) Balance 1/7/07 0 $200,000
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Lapping Customer A owes $1000 Customer B owes $1,000 Customer C Owes $1,000 Conf., prelist ->CR
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© W.R. Knechel Cutoff: Interbank Transfer Problem In the audit of the Regional Transport Company, a large branch that maintains its own bank account, cash is periodically transferred to the central account in Cedar
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Unformatted text preview: Rapids. On the branch account's records, bank transfers are recorded as a debit to the home office clearing account and a credit to the branch bank account. Similarly, the home office account is recorded as a debit to the central bank account and a credit to the branch office clearing account. Gordon Light is the head bookkeeper for both the home office and the branch bank accounts. Since he also reconciles the bank account, the senior auditor, Cindy Marino, is concerned about the internal control weakness. As a part of the year-end audit of bank transfers, Marino asks you to schedule the transfers for the last few days in 2009 and the first few days of 2010. You prepare the list below:...
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