Substantive Procedures for Cash Outflow Irregularities
Internal Accountant’s Report to Management
Dorothy Forrest
ACC/556 Forensic Accounting
January 9, 2015
Professor: Laurie McBroom
Cash Cycle
Flow of cash in a company start from making payments for products and ends with colleting cash from goods sold. More cash available means the less cash the company would need to borrow. Within the cash outflow of the cash cycle there are two major irregularities that can affect this flow of cash and that is skimming and cash larceny. Skimming is considered a white collar crime and occurs when a person take cash off the top of a company daily receipts or any other cash transaction within the company. This type of fraud can happen at any company and can involve employees or management. An example of skimming is when a person does not post cash transaction and keep the cash for personal use. Skimming crimes can add up to millions and can cause a company to shut the doors.
Cash larceny is another crime of stealing cash intentionally. This crime involves an employee taking an employer’s cash without consent. Larceny is another type of embezzlement and sometimes it is taken after the cash has been recorded in the company's ledgers. Both involves sealing and can be committed by employees and management. The type of fraud usually leaves a paper trail.
Apollo Shoes substantive procedures for locating cash cycle irregularities follow audit normal procedures of testing internal controls over cash and evaluating and collecting audit evidence.
Joe Bootwell, Chief Financial Officer (CFO), Karina Ramirez, Director of Internal Audit, of Apollo Shoes set up guidelines to follow for testing cash irregularities (University of Phoenix, 2013).
Procedures to stop cash fraud:
Procedure for cash receipt ▪ Employees receiving cash should be authorized. ▪ All areas handling cash should be equip with surveillance cameras. ▪All
