Kiting is a fraud scheme involving the transfer of money between bank accounts. Which of the following procedures is most effective in detecting kiting?

Answer options:

Reviewing the bank confirmation for hold restrictions.

Preparing a bank transfer schedule.

Preparing a proof of cash.

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. It checks if the disbursement and receipt were recorded in the same accounting period. Kiting involves recording the receipt before year-end but the disbursement after year-end.

Common mistakes

Confusing Proof of Cash (reconciliation) with Transfer Schedule (cutoff/kiting).

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