See the "First Keystone Bank" case for this question. First Keystone Bank A Japanese bank introduced the concept of around-the-clock access to cash in the 1960s when it installed the worlds first cash-dispensing machine. In 1968, the first networked ATM appeared in Dallas, Texas. Two generations later, there are more than two million cashpoints, bancomats, and holes-in-the-wall worldwide, including one in Antarctica. Not surprisingly, ATMs have been a magnet for thieves since their inception. In 2009, an international gang of racketeers used a large stash of counterfeit ATM cards to steal $9 million from hundreds of ATMs scattered around the globe in a well-planned and coordinated 30-minute crime spree. Several hightech thieves have hacked into the computer networks of banks and modified their ATM software. One such miscreant reprogrammed a network of ATMs to change the denomination of bills recognized by the brainless machinesthe ATMs treated $20 bills as if they were $5 bills. High-powered video cameras and miniature electronic devices attached to ATMs have been used to steal personal identification numbers (PINs) from a countless number of unsuspecting bank customers. A variety of low-tech schemes have also been used to rip off banks and their customers via ATMs, including forced withdrawals and post-withdrawal armed robberies. Ram-raiding involves using heavy-duty equipment to rip an ATM from its shorings. The ram-raiders then haul the ATM to a remote location and blast it open with explosives. The most common and lowest-tech type of ATM pilfering involves the aptly named tactic of shoulder-surfing. Many banks have suffered losses from their ATM operations due to embezzlement schemes perpetrated by employees. One such bank was the Swarthmore, Pennsylvania, branch of First Keystone Bank. Swarthmore, a quiet suburb of Philadelphia, is best known for being home to one of the nations most prestigious liberal arts colleges. In 2015, Forbes Magazine ranked Swarthmore College as the sixth best institution of higher learning in the United Statestwo slots below Yale, but two slots higher than Harvard. In January 2010, three tellers of First Keystones Swarthmore branch were arrested and charged with stealing more than $100,000 from its ATM over the previous two years. The alleged ringleader was Jean Moronese, who had worked at the branch since 2002 and served as its head teller since 2006. According to media reports, Moronese told law enforcement authorities that she initially began taking money from the branchs ATM in 2008 to pay her credit card bills, rent, and day care expenses. No doubt emboldened by the ease with which she could steal the money, Moronese reportedly began taking cash from the ATM just to spend because she got greedy. Prior to taking a vacation in the fall of 2008, a tearful Moronese approached one of her subordinates and fellow tellers, Kelly Barksdale, and confessed that she had been stealing from the ATM. Moronese begged Barksdale to help her conceal her thefts because she didnt want her children to see her go to jail. Barksdale was apparently persuaded by Moroneses tearful plea and agreed to help her cover up the embezzlement scheme. In fact, the cover-up was easily accomplished. According to the local police, Moronese and Barksdale simply changed the ledger control sheets that were supposed to report the amount of cash stored in the ATM and in the locked vault within the ATM. First Keystones internal control procedures mandated that two employees be involved in resupplying the ATM and its locked vault and in maintaining the ATM ledger control sheets. However, either Moronese or Barksdale completed those tasks by themselves. In early 2009, a third teller, Tyneesha Richardson, overheard Moronese and Barksdale discussing the embezzlement scheme. Richardson then reportedly asked Moronese for money to pay off her car loan. Moronese agreed to give Richardson the money and told her that she shouldnt worry because the bank had a lot of money and they would never miss it. After telling Barksdale that she had given money to Richardson, Moronese told Barksdale that if she ever needed any money to let her know. Not long thereafter, Barksdale allegedly asked Moronese for $600 to pay her rent. An internal audit eventually uncovered the embezzlement scheme at First Keystones Swarthmore branch. That internal audit revealed that $40,590 was missing from the branchs ATM, while another $60,000 was missing from the locked vault within the ATMs interior. While being interrogated by law enforcement authorities, Barksdale reportedly confessed that she and her colleagues had also stolen money from the local municipality. City employees periodically dropped off at the First Keystone branch large bags of coins collected from Swarthmores parking meters. Tellers at the branch were supposed to feed the coins into a coin-counting machine and then deposit the receipts printed by the machine into the citys parking account. According to Barksdale, she and her two fellow conspirators diverted money from Swarthmores parking funds and split it among themselves. The police estimated that the three tellers stole approximately $24,000 of the parking funds. In January 2010, when the three tellers were arrested, they did not have far to go since the Swarthmore police station was across the street from the First Keystone branch where they worked. In commenting on the case, the local district attorney observed that Barksdale and Richardson had a choice to make when they learned of Moroneses embezzlement scheme and that each had made the wrong choice. So, the lesson is you can either be a witness or you can be a defendant. These two chose to be defendants. The district attorney also commented on the branchs failure to require employees to comply with internal control procedures. The case is yet another example of the importance of not only implementing internal accounting safeguards, but ensuring that those safeguards are being followed by all employees at all levels of the business.

Identify specific audit procedures that may be applied to ATM operations. Which, if any, of these procedures might have resulted in the discovery of the embezzlement scheme at First Keystone's Swarthmore branch? Explain.