Question

1. Assume you are a new hire in the accounting department of an organization. One of your responsibilities is the reconciliation of the operating ¬account. After the end of the month you are given a copy of the bank statement and the canceled checks and instructed to perform your reconciliation. You notice there are some faint markings on a portion of the bank statement that could be ¬alterations. What steps would you take in performing the ¬reconciliation?

Answer 1

The faint markings on the bank statement are a possible clue that fraud has occurred. Any reasonable person would make note of the markings and continue to compile any unusual circumstances that would lead to predication and then to a fraud investigation. However, since there is only a mere suspicion of fraud, I would continue with the reconciliation and be extra careful during my task. Firstly, I would be sure to scan the document for anything out of the ordinary. Amounts that were pending in the previous months but recently were closed would be noted. Next, any nonrecurring unusual large amounts would be noted as well. Additionally, I would be sure to examine bank outgoing checks and deposits for unusual items such as possible forged checks or checks that are out of sequence. Also, I would examine whether any canceled checks are accounted for properly. I would ask the bank for all checks on the bank statement to ensure no missing checks. Lastly, I would suggest a more regular reconciliation of the bank statements.