Fraud Examination Casebook with Documents

CHAPTER 3Case 3: Fraudulent Edits/Adjusting Journal Entries

3-1 ANDERSON INTERNAL MEDICINE (EDITS/AJE): VOUCHING FROM A SCHEDULE TO SOURCE DOCUMENTS

Learning Objective

After completing and discussing this case, you should be able to examine edits/adjusting journal entries to accounting system records to determine whether any transactions have been altered:

1. Download the accounting record to be examined (e.g., extract edits to cash receipts) for the period you want to examine.
2. Obtain copies of the associated supporting documents (e.g., deposit ticket and bank statement) for the same time period.
3. Schedule the date and amount of the original transaction (e.g., cash before edit) and the date and amount of the edited transactions (e.g., cash after the edit) and differences between the original and edited transactions.
4. Vouch transactions from the accounting record (e.g., data extraction) to the supporting documents (e.g., verify the amount and date of cash actually deposited).
5. Determine whether the edit was justified.
6. If the amounts were not justified, identify the total number and dollars of irregularities.

This case explores the process of vouching from a schedule (e.g., data extraction of edits/adjusting journal entries) to source documents (e.g., deposit slips and bank statements).

 

HISTORY BEHIND THE FRAUD CASE

The owner of a chain of supply stores was enjoying his morning coffee while reviewing his monthly financial statements for each store. He noticed a month‐to‐month decline ...