The following are examples of possible misstatements in the client's year-end cash balance (assuming the balance sheet date is June 30): 1. On the June 30 bank reconciliation, a check was missed from the outstanding check list. On July 7, it was cleared by the bank. 2. Cash receipts on accounts receivable from July 1 to July 5 were reported as cash receipts on June 29 and 30.
The following are examples of possible misstatements in the client's year-end cash balance (assuming the balance sheet date is June 30): 1. On the June 30 bank reconciliation, a check was missed from the outstanding check list. On July 7, it was cleared by the bank. 2. Cash receipts on accounts receivable from July 1 to July 5 were reported as cash receipts on June 29 and 30.
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments
Section: Chapter Questions
Problem 31CYBK
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Please help me do question 2c
Transcribed Image Text:Question 2:
The following are examples of possible misstatements in the client's year-end cash balance
(assuming the balance sheet date is June 30):
1. On the June 30 bank reconciliation, a check was missed from the outstanding check list. On July
7, it was cleared by the bank.
2. Cash receipts on accounts receivable from July 1 to July 5 were reported as cash receipts on
June 29 and 30.
3. On the June 30 bank reconciliation, there is $1,500 in outstanding checks.
4. A check dated June 26 and disbursed in June was not recorded in the cash disbursements journal,
but on June 30 it was listed as an outstanding check.
5. On the bank reconciliation, a check was missed from the outstanding check list. It was clear in
the bank on September 6th.
Requirements:
a. Assuming that each of these misstatements was intentional (fraud), state the most likely
motivation of the person responsible.
b. What controls can be put in place for each fraudulent to limit the chances of it happening?
c. Describe an audit procedure for identifying each fraudulent activity.
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