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

No. 255 for $126.25

No. 289 for $140.00

No. 292 for $263.25

No. 8511 for $180.71

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

8622 $190.23

8623 $176.80

8632 $ 75.28

Total $19,446.93

Balances Amount

Less Undeposited Receipts $ 3,797.41

Balance per Bank, October 31 $ 15,649.52

Deduct Unrecorded credit $ 200.00

True Cash, October 31 $15,449.52

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. How is a schedule created to present the estimate of the loss?

1. How did the cashier endeavor to conceal the robbery?
2. Based on the scenario alone, name two specific components of internal control that were seemingly missing.
3. 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?