What audit steps would you take to determine if misappropriation is occurring in the assigned scenario? Explain (concisely) and supply authoritative support when possible.

Read the following scenario and answer the question:

Joe has recently implemented several changes within the Finance Department; changes he believes will improve operations and boost morale. First, he informed all employees that he expects them to take full advantage of all of their earned vacation days. Since employees must work in the department for at least one year before they can apply for vacation, Bob and Libby are currently the only employees who are eligible to take any paid vacation days. Bob is planning a one week fishing trip to Lost Pines Lake this summer, but Libby insists that she cannot take any vacation because “there are so many new employees.” Libby does appear to be busy. She is usually the first to arrive at work each day and the last to leave at night. However, Libby will lose quite a few days of leave time if she does not take a vacation soon. Joe has insisted that she take a break. Libby agrees to do this, but only takes one day at a time. Joe has also created new controls within the accounts payable function. First, the two accounts payable clerks (Nora and Bob) check each other’s documents for accuracy at the close of each workday. Each Tuesday, Libby collects the invoices to be paid for that week and prepares the documentation so that checks can be drawn and mechanically signed in the nightly cycle. The following morning, Libby collects the printed checks, verifies the amount of each check with the register, confirms that all supporting documentation is attached, sends the checks to the mailroom for delivery to the vendors, forwards the daily check register to Scott for use in the bank reconciliation, and returns the invoices to Nora and Bob for inclusion in the vendor files. Libby is also responsible for periodically reconciling the Accounts Payable subsidiary ledger to the control account. Joe arrives at work on Wednesday and is surprised to find the office locked. As he opens the door, he hears the phone ringing. It is Libby’s husband, who informs Joe that Libby had an automobile accident on the way to work and is being admitted to Junction Falls Hospital for observation. Joe plans to take over Libby’s duties until she recovers. He begins by collecting the checks that were printed the previous night, along with their supporting documentation. After completing the necessary reconciliation, he hands over the paid invoices to Bob and Nora for filing. Nora is surprised to find an invoice made payable to Zenith Enterprises. She does not recall processing this invoice the previous day.

Answer rating: 100% (QA)

In numerous associations one official level part of administration is designated to be in charge of extortion danger Administration has general obliga... View the full answer