The Patrick Company had poor internal control over its cash transactions. Facts about its cash position at November 30 were the following:
The cash books showed a balance of $18,901.62, which included un-deposited 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 December 10, the following cancelled cheques were enclosed: No. 6500 for $116.25, No. 7126 for $150.00, No. 7815 for $253.25, No. 8621 for $190.71, No. 8623 for $206.80, and No. 8632 for $145.28. The only deposit was in the amount of $3,794.41 on December 7.
The cashier handles all incoming cash and makes the bank deposits personally. He also reconciles the monthly bank statement. His November 30 reconciliation is shown below.

a. You suspect that the cashier has stolen some money.
Prepare a schedule showing your estimate of the loss.
b. How did the cashier attempt to conceal the theft?
c. Based only on the information above, name two specific features of internal control hat are missing.
d. If the cashier’s October 31 reconciliation is known to be in order and you start your audit on December 5, what specific auditing procedures could you perform to discover thetheft?

  • CreatedJanuary 09, 2015
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