An auditor is auditing the cash account. Which of the following procedures is MOST effective for detecting 'kiting'?

Answer options:

Requesting a cutoff bank statement.

Preparing a bank transfer schedule.

Confirming bank balances.

Counting petty cash.

How to approach this question

Kiting = Interbank Transfers. Test = Bank Transfer Schedule.

Full Answer

B.Preparing a bank transfer schedule.✓ Correct

A bank transfer schedule analyzes transfers between bank accounts near year-end to ensure they are recorded in the same period for both the disbursing and receiving accounts.

Common mistakes

Thinking bank confirmations detect kiting.

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