Question

Topic: You are the owner of Trust Us Inc. Betty Favor, one of the organization's most trusted employees, has worked there for 15 years. She socializes with you on a regular basis. Recently, you hired a young new accountant who just graduated from college with honors in accounting. This new employee, John Asset, tells Betty that the bank statement does not reflect the same bank balance as the bank reconciliation that he just prepared.' Previously, Betty had taken care of all banking matters and prepared the bank reconciliations. Betty comes into your office and says it appears that John does not know what he is doing because there are errors on the bank reconciliation. She states that she redid the bank reconciliation to fix the error.

7/ What is the process in the mystery?

8/ What accounts have the potential to be circumvented?

9/ What are the policies of the organization? Where are the distractions in the process?

Answer 1

Q. What is process in mystery?

Ans. It is surprising that a senior employee looking after bank transaction, etc. has made mistake in bank reconciliation.

Process mystery is that as owner of the company, I was careless and did not pay full attention to bank reconciliation.

This has happened due to overconfidence on a senior employee.and as owner of the company I trusted her work blindly

without re-checking or cross verifying the same.

Q. What accounts have the potential to be circumvented?

Ans. :As owner of the company, I should carry more responsibility on my shoulder and verify in few minutes what work is

done by my employee even if he or she is senior most in the company. This will lead to authenticity of work done by

employees and will generate better self confidence.

Q What are the policies of the organization? Where are the distractions in the process?

Ans. Organization heavily depended on senior employee in case of bank transactions, etc. As senior employee Betty

Favor failed in performing her duties at least on this front. As owner of the company, I should have taken care to

see that duties entrusted to senior employees are performed as expected. Thus, as a policy of the organization even

senior employee should be reporting to owners regularly and being owner of the company I should not blindly trust

the work done by my employees, at least, I must cross verify the work done by senior employees.