While testing a bank reconciliation, you observe that part of the payee line on certain checks has

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While testing a bank reconciliation, you observe that part of the payee line on certain checks has been ‘‘whited out’ (i.e., erased or covered up), as has the endorsement on the back of cancelled checks. It appears that the payee line had indicated the supplier’s name or some other name, now removed from the checks. When you ask the check-preparer about the ‘“white-out,”’ he immediately confesses to having embezzled some funds and asks you not to report him. You tell him that you have to report him, and he immediately yells,

“Pll deny any accusation.”

Required:

What can you do with the preparer’s initial confession in either an evidential or a legal sense? How would you proceed?

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Internal Auditing: Principles And Techniques

ISBN: 9780894131677

1st Edition

Authors: Richard L. Ratliff, W. Wallace, Walter B. Mcfarland, J. Loeboecke

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