Identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed? 2. Discuss the role accounting plays in this situation.
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Steve Ramos owns apartment buildings in Baguio City, and Tagaytay City. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in the local newspaper. The property managers transfer cash to Ramos monthly and prepare their own bank reconciliations. The manager in Baguio City has been stealing large sums of money. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the
1. Identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed?
2. Discuss the role accounting plays in this situation.
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- Steve Ramos owns apartment buildings in Baguio City, and Tagaytay City. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in the local newspaper. The property managers transfer cash to Ramos monthly and prepare their own bank reconciliations. The manager in Baguio City has been stealing large sums of money. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the balance sheet reports more cash than Ramos actually has in the bank. In negotiating the sale of the Baguio City property, Ramos is showing the balance sheet to prospective investors. Based on Case 3, identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed?Snake Creek Company has a trusted employee who, as the owner said, “handles all of the bookkeeping and paperwork for the company.” This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing cheques for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owner asked the local bank for a $20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor (a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: Cash sales sometimes were not entered in the cash register and the trusted employee pocketed approximately $50 per month. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately…Frustrated at the treatment he received by the bank appointed receiver; Heath is angry with Pestwac. Heath is looking for any opportunity to get back at them. He looks over his bank statements and notices some irregular transactions. It would seem as though someone discovered Heath’s password and instead of cleaning out his personal bank account, has instead made small weekly withdrawals to avoid detection. Over the space of one year, Heath has lost $2500. In addition, he thinks back to the circumstances of his loan with Pestwac. The loan manager, Jill, was very pushy. She mentioned the bank was running an internal competition amongst its staff to see who could close the most loans. In amongst the conversation she stated ‘look I really need this to go through quickly, if you sign up today I will offer you a sweet deal of 7% interest for the first five years. But the offer is only good today as the competition finishes at midnight’. Because Heath had a savings account with Pestwac, Jill…
- ACC Snake Creek Company has one trusted employee who, as the owner said, handles all of the book-keeping and paperwork for the company. This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing checks for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owners asked the local bank for a $ 20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor ( a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: a. Cash sales sometimes were not entered in the cash register, and the trusted employee pocketed approximately $ 50 per month. b. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious…Case 1 Steve Ramos owns apartment buildings in Baguio City, and Tagaytay City. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in the local newspaper. The property managers transfer cash to Ramos monthly and prepare their own bank reconciliations. The manager in Baguio City has been stealing large sums of money. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the balance sheet reports more cash than Ramos actually has in the bank. In negotiating the sale of the Baguio City property, Ramos is showing the balance sheet to prospective investors. Required: 1. Identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed? 2. Discuss the role accounting plays in this situation.Braun issued a $35 check to Rice. Rice took the check to Braun’s bank and had it certified. Rice then raised the amount to $350 and negotiated it to Turner. Turner presented the check for payment and received $350. When Braun received her canceled checks, she noticed the alteration and notified the bank. Who will suffer the loss?
- Superior Cabinets maintains a petty cash fund for minor business expenditures. The petty cashcustodian, Mo Smith, describes the events that occurred during the last two months:a. I established the fund by cashing a Superior Cabinets’ check for $300 made payable to me.b. Liz Clay provided a receipt for $50 for various supplies. I paid $50 cash to her.c. James Flyer provided a $70 taxi receipt, so I paid $70 cash to him.d. Ricky Ricota claimed to do photocopying for Superior Cabinets at The UPS Store for $97 buthad misplaced the receipt. I took him at his word and paid $97 cash to him.e. On the last day of the month, I prepared a summary of expenditures and requested the fund bereplenished. I received and cashed a Superior Cabinets’ check for $217, placing the cash intothe locked cash box.f. James Flyer provided receipts for taxi costs ($75), so I paid $75 cash to him.g. Woo Riun provided a $147 receipt from a local delivery company for an expedited delivery toa customer. I paid her $147…Henry Mills is responsible for preparing checks, recording cash disbursements, and preparing bank reconciliations for Signet Corporation. While reconciling the October bank statement, Mills noticed that several checks totaling $937 had been outstanding for more than one year. Concluding that these checks would never be presented for payments, Mills prepared a check for $937 payable to himself, forged the treasurer’s signature, and cashed the check. Mills made no entry in the accounts for this disbursement and attempted to conceal the theft by destroying the forged check and omitting the long-outstanding checks from subsequent bank reconciliations. Required: Identify the weaknesses in Signet Corporation’s internal control. Explain several audit procedures that might disclose the fraudulent disbursement.Henry Mills is responsible for preparing checks, recording cash disbursements, and preparing bank reconciliations for Signet Corporation. While reconciling the October bank statement, Mills noticed that several checks totaling $9,370 had been outstanding for more than one year. Concluding that these checks would never be presented for payments, Mills prepared a check for $9,370 payable to himself, forged the treasurer’s signature, and cashed the check. Mills made no entry in the accounts for this disbursement and attempted to conceal the theft by destroying the forged check and omitting the long-outstanding checks from subsequent bank reconciliations. Required: a. Identify the weaknesses in Signet Corporation’s internal control. b. Explain several audit procedures that might disclose the fraudulent disbursement.
- Your cousin works in the accounting department of his Company. You are at a family get together and he says he hates this part of his job where he has to reconcile the bank statements every month. He says "I don't understand why this is necessary. Almost all our customers pay online and the bank tracks all the ins and outs of the cash in the account. I think these bank reconciliations are a waste of time!" You think that you don't really reconcile your checking account every 1. Name at least three benefits achieved by performing a bank reconciliation that you could share with your cousin.To prevent embezzlement, what can you do to protect your operation against it? a) Make bank deposits daily. b) Ensure that the individual that makes daily deposits is bonded. c) Review and approve bank statement reconciliations each month. d) All of the above e) Only a. and b. aboveIdentity Theft Resource Center (ITRC) provides consumer and victim support, public education, and advice. Marlena's grandmother is concerned her identity has been stolen. Help Marlena reconcile her grandmother's checkbook and bank statement. The checkbook reflects a balance of $1,440. The bank statement shows a balance of $376. Notes collected were $230 and $340. The bank charged a $90 service fee. Outstanding checks were Number 255, $1,180; Number 261, $454; and Number 262, $755. There is a deposit in transit of $3,933. Prepare your bank reconciliation. Checkbook balance Add: Subtotal Deduct Reconciled balance BANK RECONCILIATION Bank balance Add: Subtotal Deduct: Reconciled balance
