- Perform a bank reconciliation as of April 1, 2016, using the bank statement for March 2016, cash receipts journal, and cash disbursements journal.
- Compare the front and back of checks and the deposit slips to the cash receipts and cash disbursement journals and identify:
- Checks where payees do not match
- Irregular disbursements
- Irregular signatures
- Irregular endorsements
- Review the bank statements for disbursements not involving checks and trace to the cash disbursements journal.
- What are these transactions?
- Where and when (date and day of the week) were these noncheck transactions actually made (not when recorded)?
- How far is the distance between the location of these noncheck transactions and Anderson Internal Medicine?
- Where does Tonya Larsen live?
Review the bank statements for disbursements not involving checks and trace to the cash disbursements journal.
- What are these transactions?
- Where and when (date and day of the week) were these noncheck transactions actually made (not when recorded)?
- How far is the distance between the location of these noncheck transactions and Anderson Internal Medicine?
- Where does Tonya Larsen live?
- What part did Tonya Larsen play in making these noncheck disbursements?
- Did Tonya Larsen benefit from these noncheck transactions?
- Review the deposits.
- How often and when were the deposits made?
- Is anything missing from the deposits?
- How do deposits relate to the bank reconciliation?
Exercise 2: Individual Assignment
- List the items (e.g., check numbers, transaction dates, and individual amounts) and totals of each category of fraud.
- What are the alleged frauds (e.g., accounts receivable skimming, disbursement fraud, embezzlement, larceny, payroll fraud, skimming, other)? Discuss each one.
- How were each of the frauds concealed?
- What circumstances allowed the frauds to happen (e.g., internal control failures, lack of background checks, missing policies and procedures)? Discuss and be specific.
- What would you recommend (e.g., controls, monitoring) to deter future frauds from happening? Discuss and be specific.
- Is there anyone you would like to interview? If so, what do you want to learn from them?
- Are there any additional steps you would like to take with respect to the fraud examination?
Exercise 3: Group Assignment—Writing Report and Associated Schedules
- Prepare a final examination report to the attorney for Southern Appalachian Insurance and an accompanying set of schedules
- Prepare associated audio‐visuals (e.g., one‐page chart of talking points, summary schedule of the categories of the loss, simplified schedule of the details of each category, bar/pie/or line chart). Note: Do not put the schedules and audiovisuals in a PowerPoint or similar presentation. The schedules and audiovisuals are addendums to the report and MUST be referenced in the report.