23-20 (Objectives 23-3, 23-4) The following are misstatements that might be found in the clients year-end cash balance (assume that the balance sheet date is June 30):

• 1. The outstanding checks on the June 30 bank reconciliation were underfooted by $2,000.
• 2. A loan from the bank on June 26 was credited directly to the clients bank account. The loan was not entered as of June 30.
• 3. A check was omitted from the outstanding check list on the June 30 bank reconciliation. It cleared the bank July 7.
• 4. A check was omitted from the outstanding check list on the bank reconciliation. It cleared the bank September 6.
• 5. Cash receipts collected on accounts receivable from July 1 to July 5 were included as June 29 and 30 cash receipts.
• 6. A bank transfer recorded in the accounting records on July 1 was included as a deposit in transit on June 30.
• 7. A check that was dated June 26 and disbursed in June was not recorded in the cash disbursements journal, but it was included as an outstanding check on June 30.

Required

• a. Assuming that each of these misstatements was intentional (fraud), state the most likely motivation of the person responsible.
• b. What control can be instituted for each fraud to reduce the likelihood of occurrence?
• c. List an audit procedure that can be used to discover each fraud.