Reference no: EM132719092
Case and Questions - Internal Control Case
Many banks have suffered losses from their ATM operations due to embezzlement schemes perpetrated by employees. One such bank was the Yorkshire bank branch in Cambridgeshire.
Two tellers of Yorkshire bank branch in Cambridgeshire were arrested and charged with stealing more than £78,000 from its ATM over two years. The alleged ringleader was Jean Moronese, who had worked at the branch since 2012 and served as its head teller since 2018. According to media reports, Moronese told law enforcement authorities that she initially began taking money from the branch's ATM in 2013 to pay her credit card bills, rent and day care expenses. Moronese 'begged' and confessed to Kelly Barksdale one of the tellers to help her conceal her thefts 'because she didn't want her children to see her go to jail. Barksdale was apparently persuaded by Moronese's tearful plea and agreed to help her cover up the embezzlement scheme. Eventually, Barksale joined Maronese to steal from the Bank's ATM cash machine.
According to the local police, Moronese and Barksale simply changed the ledger control sheets that were supposed to report the amount of cash stored in the ATM and in the locked vault within the ATM. Yorkshire Bank internal control procedures mandated that three employees be involved in resupplying the ATM and its locked vault and in maintaining the ATM ledger control sheets. However, either Moronese or Barksdale completed those tasks by themselves.
The Police also commented on the branch's failure to require employees to comply with internal control procedures. Also, the bank failed to implement internal accounting safeguards, by ensuring that those safeguards are being followed by all employees at all levels of the business.
Questions -
1. List four things that should be included as part of the audit documentation during the Yorkshire banking case.
2. As a senior auditor in the Yorkshire bank ATM case list the risk assessment procedures you will use in your auditing engagement.
3. Prepare a list of internal control procedures that banks and other financial institutions have implemented, or should implement, for their ATM operations.
4. Identify specific audit procedures that may be applied to ATM operations. Which, if any, of these procedures might have resulted in the discovery of the embezzlement scheme at Yorkshire bank branch? Explain.
5. When is analytical procedure used and what are the purpose during the Yorkshire bank case.
6. As a senior auditor to Yorkshire bank case, how can you maintain good professional judgement in your day-to-day operations.