A bank branch manager is reviewing the daily scrolls and subsidiary books to ensure compliance with the internal control framework. He notices that several high-value cash withdrawals from customer accounts were recorded in the Cash Book only at the end of the day, based on loose slips rather than the actual withdrawal forms. Furthermore, the ledger postings for these transactions were delayed by 48 hours due to a system glitch. Applying your knowledge of the maintenance of Cash Books and Ledgers, what is the most significant risk associated with this practice and what is the corrective measure?

Question

Accepted Answer

The risk of unauthorized transactions or fraud due to the lack of real-time recording; the measure is to enforce immediate recording in the Cash Book from primary documents.

Answer

The risk of arithmetical errors in the ledger; the measure is to perform a manual check of all totals.

Answer

The risk of overstating the bank's liquidity; the measure is to increase the statutory liquidity ratio (SLR) at the branch level.

Answer

The risk of misclassifying capital expenditure as revenue; the measure is to retrain the staff on accounting principles.

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