Auditing Chapter 6

Front 1

The The Practice of building up balances in one more bank accounts based on uncollected (float) checks drawn against similar accounts in other banks

Back 1

Check Kiting

Front 2

Client bank statement (usually sent directly to the auditor) that includes all paid checks and deposits slips through a certain date, usually the middle of the month

Back 2

Cutoff bank statment

Front 3

(see employment fraud)

Back 3

defalcation

Front 4

Violations of laws or government regulations by the company or its management or employees that produce direct and material effects on dollar amounts in financial statements

Back 4

Direct-effect illegal acts

Front 5

a type of fraud involving employees or non employees wrongfully taking money entries and other forms of lying and cover-up

Back 5

Embezzlement

Front 6

(also called defalcation and misapproproation of assets): The use of fraudulent means to take money or other property to the fraudster's use, and the cover-up

Back 6

Employee fraud

Front 7

Unintentional misstatements or omissions of amounts or disclosures in financial statements

Back 7

Errors

Front 8

An insurance policy that covers most kinds of cash embezzlement losses

Back 8

Fidelity Bonds

Front 9

Knowingly making material misrepresentations of fact with the intent of inducing someone to believe the falsehood and act upon it and thus suffer a loss or damage

Back 9

fraud

Front 10

The theft of a payment and the application of subsequent payments to cover the theft

Back 10

Lapping

Front 11

Simple theft of an employer's property that is not entrusted to an to an employee's care, custody, or control

Back 11

Larceny

Front 12

An arrangement in which a fiduciary (ex. bank) receives the payments, lists the receipts, deposits the money, and sends the remittance advices to the company

Back 12

lockbox

Front 13

Deliberate fraud committed by management that injures investors and creditors through materially misleading information

Back 13

Management Fraud

Front 14

(see employee fraud)

Back 14

Misappropriation of assets

Front 15

Pressure experienced by a person and believed unshareable with friends and confidants

Back 15

Motive

Front 16

A reconciliation in which in which the bank balance, the bank report of cash deposited, and the bank report of cash paid are all reconciled to the company's general ledger and cash receipts and disbursements journals

Back 16

Proof of cash

Front 17

An Analysis uses to determine whether transfers of cash from one bank to another were recorded properly (correct amount adn correct date)

Back 17

Schedule of interbank transfers