Fraud Identification Training Sept-Oct 2022

CASE STUDY 1

A spot check of debit and credit tickets reveals many instances of insufficient detail describing the transactions. Additionally, only the person making the entry initials the ticket. The examiner responsible for reviewing the securities portfolio informs you that a correspondent bank holds all securities for safekeeping and only the individual in charge of the bank's investment portfolio has the authority to move those securities. Such a request must be in letterform and sent to the correspondent bank. Other matters brought to your attention include accumulated cash over and shortage differences are maintained in two respective general ledger accounts. Such differences are not accumulated for individual tellers. Unissued official checks are held under the joint custody of a secretary and the auditor. Cashiers checks are numbered only when issued. All employees are required by management to maintain their checking accounts elsewhere other than subject bank. An Assistant Examiner informs you that in order for the bank to simplify its bookkeeping procedure, expense checks are not recorded until paid. After the preceding observations, you made an appointment with the auditor. The auditor is very cooperative and appears quite proud of the audit operation. The auditor explains that his department is directly responsible to the Vice President/Operations and to no one else. Detailed monthly audit reports are submitted to the vice president, and the auditor relies on this officer to furnish the Board with the substance of these reports. You then ask the auditor for the department's audit frequency schedule and the work papers covering audits performed this year. The auditor tries to give you full attention, but the phone rings continually as the auditor tries to answer inquiries from bank personnel regarding means and methods of handling certain operational matters.

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