CH8 HW2

Case Study:

Management discovers that a supervisor at one of their restaurant locations removes excess cash and resets sales totals throughout the day on the point of sale (POS) system. At closing the supervisor deposits cash equal to the recorded sales on the POS system and keeps the rest.

The supervisor forwards the close-of-day POS reports from the POS system along with a copy of the bank deposit slip to the companys revenue accounting department. The revenue accounting department records the sales and the cash for the location in the general ledger and verifies the deposit slip to the bank statement. Any differences between sales and deposits are recorded in an over/short account and, if necessary, followed up with the location supervisor. The customer food order checks are serially numbered, and it is the supervisors responsibility to see that they are accounted for at the end of each day. Customer checks and the transaction journal tapes from the POS system are kept by the supervisor for one week at the location and then destroyed.

Questions:

1. What control procedures in the above case allowed the fraud to occur?
2. What audit procedures would have detected the fraud?