Fraud, Internal Control, and Cash

Reference: Weygandt ● Kimmel ● Kieso (2019)

Progdi Perpajakan
Semester Genap 2021/2022

Rini Hastuti, SE.,Msi.,Akt

Fraud and Internal Control (1 of 2)
Fraud
Opportunity
Dishonest act by an
employee that results in
personal benefit to the
employee at a cost to the
employer.

Financial Pressure Rationalization

ILLUSTRATION 7.1 Factors that contribute to fraudulent activity

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Fraud and Internal Control (2 of 2)
Internal Control
Purposes of internal control:
1. Safeguard assets.
2. Enhance accuracy and reliability of accounting
records.
3. Increase efficiency of operations.
4. Ensure compliance with laws and regulations.

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 Establishment of Responsibility
Principles of
Internal Control Segregation of Duties
Activities
Documentation Procedures

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 Principles of
Internal Control
Activities
• Physical Controls
• Independent Internal
Verification
• Human Resource
Controls
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Limitations of Internal Control
Costs should not exceed benefit

Human element

Size of the business

Helpful Hint
Controls may vary with the risk level of the activity. For example,
management may consider cash to be high risk and maintaining
inventories in the stockroom as lower risk. Thus, management
would have stricter controls for cash.

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• Petty Cash Fund - Used

Petty to pay small amounts.

• Involves:
Cash • establishing the fund
• making payments
Fund from the fund
• replenishing the fund

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Establishing the Petty Cash Fund
Illustration: If Zhū Ltd. decides to establish a NT$3,000 fund
on March 1, the general journal entry is :

March 1 Petty Cash 3,000

Cash 3,000

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 • Management usually limits the size of
Making expenditures
Payments • Does not permit use of fund for
certain types of transactions
From Petty • Payments are documented on a
Cash prenumbered receipt
• Signatures of both the custodian and
the individual receiving payment are
9
required on the receipt
• Supporting documents should be
attached to receipt
• Custodian keeps receipts in petty cash
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box until fund is replenished

• Sum of receipts and money in fund
should equal established total at all
Sons, Inc.

times
Replenishing the Petty Cash Fund (1 of 2)
Illustration: On March 15 Zhū Ltd.’s petty cash custodian
requests a check for NT$2,610. The fund contains NT$390
cash and petty cash receipts for postage NT$1,320, freight-out
NT$1,140, and miscellaneous expenses NT$150. The entry is:
March 15 Postage Expense 1,320
Freight-Out 1,140
Miscellaneous Expense 150
Cash 2,610

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Replenishing the Petty Cash Fund (2 of 2)
Illustration: Assume in the preceding example that the
custodian had only NT$360 in cash in the fund plus the
receipts as listed. The request for reimbursement would
therefore be for NT$2,640 and Zhū would make the following
entry.

March 15 Postage Expense 1,320

Supplies 1,140
Miscellaneous Expense 150
Cash Over and Short 30
Cash 2,640

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DO IT! 2b: Petty Cash Fund
Bateer Company established a $50 petty cash fund on July 1. On July
30, the fund had $12 cash remaining and petty cash receipts for
postage $14, office supplies $10, and delivery expense $15. Prepare
journal entries on July 1 and on July 30.
July 1 Petty Cash 50
Cash 50
July 30 Postage Expense 14
Supplies 10
Delivery Expense 15
Cash Over and Short 1
Cash 38
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Control Features of a Bank Account
Use of a bank contributes significantly to good internal
control over cash.
• Minimizes amount of currency on hand
• Creates a double record of bank transactions
• Bank reconciliation

Helpful Hint
Essentially, the bank statement is a copy of the bank’s records sent
to the customer or made available online for review.

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Making Bank Deposits
Authorized employee should make deposit.

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Writing Checks
Written order signed by depositor directing bank to pay a
specified sum of money to a designated recipient.

Maker

Payee

Payer

ILLUSTRATION 8.9
Check with remittance advice

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• Disbursement systems that

Electronic use wire, telephone, or
computers to transfer cash
Funds from one location to
another
Transfer • Use is quite common

(E F T) • Normally result in better

internal control since no
System cash or checks are handled
by company employees

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 Prepared from bank’s perspective

Bank
Statements (1 Every deposit bank receives is an
increase in bank’s liabilities (an
of 6) account payable to the depositor)

Lists in numerical sequence all

paid checks along with date check
17 was paid and its amount

Bank includes with bank

statement memoranda explaining
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other debits and credits it made to

depositor’s account
A check that is not paid by a bank
because of insufficient funds in a
bank account is called an NSF
check (not sufficient funds)
Inc.
Bank
Statements
(2 of 6)

Each month, the

company receives
from the bank a
bank statement
showing its bank
transactions and
balances.

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Bank Statements (3 of 6)
• Shows the following:
• Checks paid and other debits that reduce the balance.
• Debit card transactions
• Electronic funds transfers for bill payments
• Deposits and other credits that increase the balance.
• Direct deposit
• Automated teller machine
• Electronic funds transfer

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Bank Statements (4 of 6)
• Shows the following:
• Debit Memorandum.
• Bank service charge
• N S F check (not sufficient funds)
• Credit Memorandum.
• Collection of a notes receivable
• Interest earned
• The account balance after each day’s transactions.

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Reconciling the Bank Account

Reconcile balance per books and balance per bank

to their “correct or true” balance.

Reconciling Items:

• Time Lags
• Deposits in transit
• Outstanding checks
• Bank memoranda
• Errors

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Reconciling the Bank Account
Reconciliation Procedure
Cash Balance Per Bank Cash Balance Per Books
+ Deposits in transit + EFT collections and
- Outstanding checks other deposits
+/- Bank errors - NSF (bounced)
checks
- Service charges and
other Payments
+/- Company errors
Corrected Balance Corrected Balance

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Bank Reconciliation Illustrated (1 of 4)
The bank statement for Cray Gourmet, which the company accessed
online, shows a balance per bank of €15,907.45 on April 30, 2020. On
this date the balance of cash per books is €11,709.45. From the
foregoing steps, Cray determines the following reconciling items for
the bank.
Step 1. Deposits in transit (+): April 30 deposit
(received by bank on May 1). €2,201.40
Step 2. Outstanding checks (−): No. 453, €3,000.00;
No. 457, €1,401.30; No. 460, €1,502.70. 5,904.00
Step 3. Bank errors (+/−): None.
Reconciling items per books are as follows:

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Reconciling items per books are as follows:
Step 1. Other deposits (+): Unrecorded electronic
receipt from customer on account on April 9
determined from the bank statement. €1,035.00
Step 2. Other payments (−): The electronic payments
on April 3 and 7 were previously recorded by the
company when they were initiated. Unrecorded charges
determined from the bank statement are as follows:
Returned NSF check on April 29 425.60
Debit and credit card fees on April 30 120.00
Bank service charges on April 30 30.00
Step 3. Company errors (+): Check No. 443 was correctly
written by Cray for €1,226 and was correctly paid by the
bank on April 12. However, it was recorded as €1,262 on
Cray’s books. 36.00
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 Bank Reconciliation
April 30, 2020
Cash balance per bank statement €15,907.45
Add: Deposits in transit 2,201.40
Less: Outstanding checks
No. 453 €3,000.00
No. 457 1,401.30
No. 460 1,502.70 5,904.00
Adjusted cash balance per bank €12,204.85

Cash balance per books €11,709.45

Add: Electronic funds transfer received €1,035.00
Error in recording check No. 443 36.00 1,071.00
Less: NSF check 425.60
Debit and credit card fees 120.00
Bank service charge 30.00 575.60
Adjusted cash balance per books €12,204.85

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Bank Reconciliation Illustrated (2 of 4)
Entries From Bank Reconciliation
Collection of Electronic Funds Transfer: Payment of account
by customer. The entry is:
Apr. 30 Cash 1,035.00
Accounts Receivable 1,035.00

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Bank Reconciliation Illustrated (3 of 4)
Book Error: The cash disbursements journal shows that check
no. 443 was a payment on account to Roux Foods, a supplier.
The correcting entry is:
Apr. 30 Cash 36.00
Accounts payable 36.00

N S F Check: As indicated earlier, an NSF check becomes an

account receivable to the depositor. The entry is:
Apr. 30 Accounts receivable 425.60
Cash 425.60

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Bank Reconciliation Illustrated (4 of 4)
Bank Charges Expense: Fees for processing debit and credit
card transactions (€120) and the bank service charges (€30)
have been combined in a single entry as follows:
Apr. 30 Bank Charge Expense 150.00
Cash 150.00
Cash
Apr. 30 Balance 11,709.45 Apr. 30 425.60
30 1,035.00 30 150.00
30 36.00
Apr. 30 Balance 12,204.85

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Reporting of Cash
• Cash consists of coins, currency (paper money),
checks, money orders, and money on hand or
deposit
• The statement of financial position reports amount of
cash available at a given point in time
▪ Listed first in current assets section
• Statement of cash flows shows sources and uses of
cash during a period of time

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Reporting Cash
• Cash Equivalents
Cash equivalents are short-term, highly
liquid investments that are both:
• Readily convertible to known amounts
of cash, and
• So near their maturity that their
market value is relatively insensitive to
changes in interest rates.
• Restricted Cash
Cash that is not available for general use.

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Reporting Cash
Korean Air Lines, Inc.
Statement of Financial Position
(partial, in millions)
Assets
Current assets
Short-term investments ₩111,988
Cash and cash equivalents 967,481

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Thank You
Check next 2 slides
for Cash exercises!
Soal 1. Dipresentasikan oleh Kelompok 1
Dibahas oleh kelompok 22

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 Dipresentasikan oleh Kelompok 2
Soal 2. Dibahas oleh kelompok 21

Pada 31 Mei 2021, PT Errel memiliki saldo kas menurut buku perusahaan Rp
6.781.500. Laporan dari Bank Mandi saldo kas pada 31 Mei 2021 sebesar Rp
6.824.600. Perbandingan antara buku perusahaan dengan buku bank
menunjukkan fakta-fakta berikut :
1. Buku bank sudah termasuk biaya administrasi bank sebesar Rp 60.000
2. Hasil penjualan pada 12 Mei disetorkan ke bank. Jurnal yang dibuat
perusahaan menunjukkan jumlah yang salah sebesar Rp 886.150; Bank
mencatat jumlah yang benar sebesar Rp 836.150
3. Total cek beredar per 31 Mei berjumlah Rp 276.250; Setoran dalam
perjalanan sebesar Rp 1.916.150
4. Pada 18 Mei perusahaan menerbitkan cek senilai Rp 685.000 kepada Bapak
Barry untuk melunasi hutang. Jumlah tersebut salah dijurnal dan diposting
oleh perusahaan sebesar Rp 658.000

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5. Bank menerima pelunasan piutang wesel sebesar Rp
3.000.000 ditambah bunga Rp 80.000. Fee untuk bank
sebesar Rp 20.000
6. Bank melakukan kesalahan pemotongan akun. Cek
yang seharusnya dipotong ke akun PT Rid, dipotongkan
ke akun PT Errel sebesar Rp 600.000
7. Terdapat cek kosong dari Ibu Sandy (konsumen)
sebesar Rp 640.000
Diminta :
1. Siapkan rekonsiliasi bank 31 Mei 2017
2. Siapkan jurnal yang dibutuhkan pada 31 Mei 2017

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