Question

The owner of a busy city restaurant used the following system of internal control for sales. Each customer table had one bill which was numbered in sequence on a form (this numbering was pre-printed, so the bills given to customers each had their own sequential unique number). Employees entered all pre-numbered customer bills into the cash register and, at least once each day, the bookkeeper collected the bills (sales dockets), listed them on a deposit sheet and made the related bank deposit. The owner then matched the totals on the deposit sheet with the amounts shown in the stamped deposit book and believed this to be adequate supervision. Over a three-month period, the bookkeeper skimmed a portion of each day’s cash receipts by omitting some of the cash sales bills and pocketing the corresponding amounts. Briefly discuss 2 ways how the owner might uncover the fraud?

Answer 1

Two ways in which this fraud can be mitigated is :

• First, the owner should not only rely on the stamped deposit book prepared and maintained by the bookkeeper rather he should also cross check the amount mentioned in the cash register entered by the employees who enter every transaction by the unique pre numbered customer bills. This will help to understand that there is no fraud being committed and anything such is being created it would reflect to the owner easily.
• The second thing the owner can do is to hire two bookkeepers one who is at present and one more and distribute the work between them, like one can collect bills and oyher should list them in records and make bank deposits. This way both will have the knowledge of others activity AMD thus the fraud can be controlled. Also the old bookkeeper cannot bsucceed in making fraud as the other bookkeeper is now also involved in his activities with him and will have full knowledge of records other than him and he cannot make frauds.

Thus, these were the two ways in which owner could uncover the fraud in the business.