ExpertMedium1 markMultiple Choice
CPA · Question 36 · Area 3: Performing Procedures
Kiting is a fraud scheme involving the transfer of money between bank accounts. Which of the following procedures is most effective in detecting kiting?
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:
A.
Reviewing the bank confirmation for hold restrictions.
B.
Preparing a bank transfer schedule.
C.
Preparing a proof of cash.
D.
Counting petty cash.
How to approach this question
Kiting = Interbank Transfers. Test = Bank Transfer Schedule.
Full Answer
B.Preparing a bank transfer schedule.✓ Correct
Preparing a bank transfer schedule.
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).
Practice the full CPA AUD Practice Exam
78 questions · hints · full answers · grading
More questions from this exam
Q01A CPA firm is auditing a large public company. The audit partner's spouse has just been promoted ...HardQ02During the acceptance phase of a new audit engagement for a private company, the successor audito...HardQ03A CPA firm is designing its system of quality control. Which of the following policies would most...MediumQ04An auditor is establishing an understanding with a client regarding the services to be performed ...MediumQ05Under the AICPA Code of Professional Conduct, which of the following fee arrangements is prohibit...Medium