Instructions: For the first three scenarios, you are the auditor (you are right out of school and this is your first audit) on the audit with a supervisor and manager on site with you. Materiality is set at $20,000, tolerable misstatement $15,000 and trivial $3,000. Please respond with your thoughts as to how you should handle the situation and possible issues that could have created the circumstances (internal control issues/errors/management overrides etc).

1. Case Study #1 You are assigned to audit cash. You obtain the bank statements, confirmation, and bank cut-off statements. You notice that there is a discrepancy between the confirmation and the bank statement over one day's activity totaling $554. It appears that the person at the bank just wrote the wrong day's total down. In addition, you note that a block of checks amounting to $1,305.87 was excluded from the bank reconciliation list of outstanding checks. The bank reconciliation also lists an "unreconciled difference" of $1,276.98. When you ask the clerk, who prepared the bank reconciliation questions, she is extremely unhelpful and dismissive.