When the discovery is made for many checks for large amounts that have been drawn and paid to the treasurer, then charged to the miscellaneous account. That would mean that all the funds that were transferred to the treasurer were not meant for business. This is because the manufacturing business is still a small-sized institution and would mean that it is still needed in the corporation (Pany, 2020) . That means that there is a possible case of fraud as the amounts are large. The auditor should take action on the miscellaneous account to determine the status or purpose. This will ensure that the people who are involved in the transactions are accountable.
The steps for determining the case's nature are to be taken upon discovery of an error or fraud and take some actions after that. Therefore, the auditors should determine how adequate the documents are that are shown to support the charges towards the miscellaneous expense. The auditor should then examine the process taken to approve the disbursement from the officers in charge of the president apart from the treasurer before all those checks were released. This means that they will be able to identify who may be involved if there is the detection of fraud. It will also help determine whether the institution follows the required measures for the recording of such documents and identify the fraudulent members. The officers should also make sure that immediately when there is the detection of a possible or a determined case of fraud, then the committee in charge of auditing should be informed right away. That ensures a smooth flow of information and that nothing is done in the dark to prevent future claims for misappropriation of information.
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References
Pany, R. W. (2020). Cash and Financial Investments. In Principles of Auditing & Other Assurance Services (pp. 401-456).
