Multiple Choice Questions
The following questions deal with discovering fraud in auditing year-end cash. Choose the best response.
a. Which of the following is one of the better auditing techniques to detect kiting?
(1) Review composition of authenticated deposit slips.
(2) Review subsequent bank statements and cancelled checks received directly from the banks.
(3) Prepare year-end bank reconciliations.
(4) Prepare a schedule of bank transfers from the client's books.
b. Which of the following cash transfers results in a misstatement of cash at December 31, 2011?

c. A cash shortage may be concealed by transporting funds from one location to another or by converting negotiable assets to cash. Because of this, which of the following is vital?
(1) Simultaneous bank confirmations.
(2) Simultaneous bank reconciliations.
(3) Simultaneous four-column proofs of cash.
(4) Simultaneous surprise cashcounts.

Transcribed Image Text:

BANK TRANSFER SCHEDULE Disbursements Receipt Recorded in books Paid by bank Recorded in books Received by bank Transfer 12/31/11 1/4/12 12/31/11 1/4/12 1/4/12 1/5/12 1/5/12 12/31/11 12/31/11 12/31/11 1/4/12 12/31/11 1/4/12 1/4/12 1/4/12