How do auditors detect kiting

Kiting is particularly effective when an individual engages in a reasonable amount of normal check writing and depositing activities in an account over a period of time, so that the related account appears perfectly normal, and so is subject to fewer bank-imposed restrictions than might be the case for a newly-opened account. A kiting scheme may involve multiple banks, where an individual is constantly shifting check payments among numerous accounts, just keeping ahead of the funds-clearing mechanism.

This can be a particular problem when a kiting scheme is finally shut down, for one of the banks in the group may be stuck with the bulk of the losses , depending on which checks were written from which accounts, and the timing of the payments.

Accounting Books. Finance Books. Operations Books. Articles Topics Index Site Archive. About Contact Environmental Commitment. What is Check Kiting? Auditor Techniques to detect Lapping and Kiting The Know the difference between the lapping and kitting, to the two it is a form of cheating are often found on examination of auditors' client cash balances. What is Kiting? Bookkeepers can perform check kiting if they have access to the checks, perform the bank reconciliations, and record the checks in the accounting system.

This might sound like a complete violation of the segregation of duties concept. Well, it is. Review the composition of authenticated deposit slips. Review subsequent bank statements. Prepare a schedule of the bank transfers. Prepare a year-end bank reconciliation. Kiting, can someone explain it to me? These usually show the days following the balance sheet date. AuditBoard is the top-rated audit management software on G2, and was recently ranked as the third fastest-growing technology company in North America by Deloitte.

Tell us more Hide this section if you want to rate later. How might auditors detect Questions Courses. What is check kiting? How might auditors detect kiting? Sushil C answered on June 23, Check kiting is the illegal manner of discounting a check of a financial institution account with insufficient property to cowl that take a look at. Do you need an answer to a question different from the above?

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