Safety First Ltd had poor internal control over its cash transactions Facts about its cash position at March 31 were as follows The cash books showed a balance of $18,901 62, which included undeposited receipts A credit of $100 on the bank statement did not appear on the books of the company The balance according to the statement was $15,550 When you received the cutoff bank statement on April 10, the following cancelled cheques were enclosed No 7500 for $116 25, No 8126 for $150 00, No 8815 for $253 25, No 9621 for $190 71, No 9623 for $206 80, and No 9632 for $145 28 The only deposit was in the amount of $3,794 41 on April 7 The cashier handles all incoming cash and makes the bank deposits personally He also reconciles the monthly bank statement His March 31 reconciliation is shown below Balance, per books, March 31 $18,901 62 Add Outstanding cheques 9621 $190 71 9623 206 80 9632 145 28 442 79 19,344 41 Less Undeposited receipts 3,794 41 Balance per bank, March 31 15,550 00 Deduct Unrecorded credit 100 00 True cash, March 31 $15,450 00 Required (max 1 page, single spaced, bullet points are acceptable) You suspect that the cashier has stolen some money Prepare a schedule showing your estimate of the loss How did the cashier attempt to conceal the theft Based only on the information above, name two specific features of internal controls that are missing If the cashiers February 28 reconciliation is known to be in order and you start your audit on April 5, what specific audit procedures could you perform to discover the theft

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Posted on Jul 10, 2024

Safety First Ltd. had poor internal control over its cash transactions. Facts about its cash position at March 31 were as follows:

The cash books showed a balance of $18,901.62, which included undeposited receipts. A credit of $100 on the bank statement did not appear on the books of the company. The balance according to the statement was $15,550.
When you received the cutoff bank statement on April 10, the following cancelled cheques were enclosed: No. 7500 for $116.25, No. 8126 for $150.00, No. 8815 for $253.25, No. 9621 for $190.71, No. 9623 for $206.80, and No. 9632 for $145.28. The only deposit was in the amount of $3,794.41 on April 7.
The cashier handles all incoming cash and makes the bank deposits personally. He also reconciles the monthly bank statement. His March 31 reconciliation is shown below.

Required (max 1 page, single spaced, bullet points are acceptable):

You suspect that the cashier has stolen some money. Prepare a schedule showing your estimate of the loss.
How did the cashier attempt to conceal the theft?
Based only on the information above, name two specific features of internal controls that are missing.
If the cashiers February 28 reconciliation is known to be in order and you start your audit on April 5, what specific audit procedures could you perform to discover the theft?