The audit of the bank reconciliation will normally lead to the discovery of theft of cash by interception of cash receipts from customers before they are recorded, with the account written off as a bad debt.

Question

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The audit of the bank reconciliation primarily focuses on verifying the accuracy of the bank's ending balance and the company's book balance by identifying outstanding checks, deposits in transit, and other reconciling items. It may not directly uncover theft of cash by interception before recording, as this type of fraud involves manipulating records before they reach the reconciliation process. Detection of such theft often requires additional audit procedures targeting internal controls, receipt processes, and review of write-offs.

The Audit of the Bank Reconciliation Will Normally Lead to the Discovery