Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Option #2: Fraud in the Bank Reconciliation Poor internal control over its cash transactions are becoming a problem for the Hogan Company. The following are
Option #2: Fraud in the Bank Reconciliation Poor internal control over its cash transactions are becoming a problem for the Hogan Company. The following are facts about its cash position on October 31: The company's books showed a balance of $19,004.62, which included undeposited receipts. A credit of $200 on the bank statement is not included in the company's books. The bank statement's balance was $15,650. . Outstanding checks were: Check Number Amount $126.25 No. 255 for $140.00 No. 289 for $263.25 No. 292 for $180.71 No. 8511 for No.8632 for $216.80 No.8719 for $135.28 The only deposit was for $3,797.41 on November 7. The cashier personally handles all incoming cash and bank deposits. He is responsible for reconciling the monthly bank statement as well. The November 30 reconciliation: Balance per books, October 31: $19,004.62 Add: Outstanding Checks Check Number Amount $190.23 8622 $176.80 8623 $75.28 8632 Total $19,446.93 Balances Amount Less Undeposited Receipts $3,797.41 Balance per Bank, $ October 31 15,649.52 $200.00 Deduct Unrecorded credit $15,449.52 True Cash, October 31 Requirements: You're suspicious that the cashier may have pocketed some money and suspect that some of the un-deposited receipts of $3,797.41 may have been taken. Create a schedule presenting your estimate of the loss. a. How did the cashier endeavor to conceal the robbery? b. Based on the scenario alone, name two specific components of internal control that were seemingly missing. c. If the cashier's September 30 reconciliation is known to be accurate and you start your audit on November 10, what specific substantive audit procedures would help you detect the missing money? Option #2: Fraud in the Bank Reconciliation Poor internal control over its cash transactions are becoming a problem for the Hogan Company. The following are facts about its cash position on October 31: The company's books showed a balance of $19,004.62, which included undeposited receipts. A credit of $200 on the bank statement is not included in the company's books. The bank statement's balance was $15,650. . Outstanding checks were: Check Number Amount $126.25 No. 255 for $140.00 No. 289 for $263.25 No. 292 for $180.71 No. 8511 for No.8632 for $216.80 No.8719 for $135.28 The only deposit was for $3,797.41 on November 7. The cashier personally handles all incoming cash and bank deposits. He is responsible for reconciling the monthly bank statement as well. The November 30 reconciliation: Balance per books, October 31: $19,004.62 Add: Outstanding Checks Check Number Amount $190.23 8622 $176.80 8623 $75.28 8632 Total $19,446.93 Balances Amount Less Undeposited Receipts $3,797.41 Balance per Bank, $ October 31 15,649.52 $200.00 Deduct Unrecorded credit $15,449.52 True Cash, October 31 Requirements: You're suspicious that the cashier may have pocketed some money and suspect that some of the un-deposited receipts of $3,797.41 may have been taken. Create a schedule presenting your estimate of the loss. a. How did the cashier endeavor to conceal the robbery? b. Based on the scenario alone, name two specific components of internal control that were seemingly missing. c. If the cashier's September 30 reconciliation is known to be accurate and you start your audit on November 10, what specific substantive audit procedures would help you detect the missing money
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started