Daniel Martin, CPA is the auditor for HMO Health Systems. He requests that the client’s bank cutoff statement be sent directly to him at his CPA office. In tracing reconciling items to the cutoff statement, he lists the following:
A deposit in transit (dated 12/31/10) cleared the bank on 01/10/11.
Checks 1812, 1813, 1814, and 1815 recorded as of 12/31/10 did not clear the bank until 01/19/11, 01/20/11, 01/21/11, and 01/22/11, respectively.
An outstanding check payable to T. Simpson was endorsed by HMO’s controller.

Required:
What possible errors or fraudulent activity is associated with each of these items? Explain whether any audit adjustments are necessary.