The auditor should trace bank transfers using a bank transfer schedule primarily to determine if: A) cash has been understated due to kiting. B) cash has been overstated due to kiting. C) cash has been understated due to lapping. D) cash has been overstated due to lapping. E) any unusual cash receipts or payments occurred.

Question

Quizplus · Accepted Answer

Kiting involves artificially inflating the balance of a bank account by making checks or wire transfers between accounts to make it appear as if there is more money in the account than there actually is. Tracing bank transfers helps auditors identify if cash balances have been overstated due to such activities.

The Auditor Should Trace Bank Transfers Using a bank Transfer