You are a forensic accountant investigating a case of embezzlement at a company. The company's accounting records

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Question:

You are a forensic accountant investigating a case of embezzlement at a company. The company's accounting records show that an employee has been fraudulently diverting funds from the company for personal use. To determine the extent of the fraud, you decide to perform a bank reconciliation and identify any discrepancies.

Using the information provided, answer the following questions:

a) The company's accounting records show a balance of $100,000 in their bank account as of December 31, 2022. However, the bank statement shows a balance of $95,000 as of the same date. Calculate the reconciling items and adjust the balance per the company's books. (10 marks)

b) During your investigation, you discover that the employee has been diverting funds from the company's account by writing checks to a fictitious vendor. The total amount of fraudulent checks is $20,000. If the company has a 20% tax rate, how much will the employee need to pay in taxes on the embezzled funds? (5 marks)

c) Based on your analysis, do you believe the embezzlement was a one-time occurrence, or has it been ongoing? Explain your answer. (5 marks)