Reference no: EM13584851

Liu Yanlin a teller at Changlu Agricultural Bank seemed to be a model employee. She enthusiastically accepted a wide variety of responsibilities and actively sought to expand her knowledge about every possible aspect of the bank%u2019s business. She rarely took a day off, even when she was sick, and routinely worked late into the night in her words %u201Cjust to make sure that all of the day%u2019s work was properly recorded in the accounting records.%u201D.

As a teller, Liu Yanlin recorded many of the bank%u2019s transactions in the accounting records herself.

Realizing that the bank had gone several years without an audit, the bank manager hired two certified public accountants (CPAs) Mr. Zhang and Ms. Chen to perform one. The idea that an external audit was necessary seemed to personally offend Liu Yanlin, and she insisted that everything had been properly accounted for. Nevertheless, Mr. Zhang and Ms. Chen performed the audit.

The audit revealed some very serious problems: Most notably, more than $100,000 was either missing or improperly accounted for. A number of adjustments had been made to customer accounts with credit memorandums. Also, many transactions had been posted late several days late, in fact. Finally, the audit revealed some unusual cash payments, listed as %u201Coffice expenses%u201D. Clearly, Liu Yanlin was an embezzler. The bank president, who considered Liu Yanlin a close friend, was devastated.

You are one of the CPAs that performed the audit at Changlu Agricultural Bank, and you must now prepare a written memo to the bank president. With tact and professional courtesy, explain how the money went missing. Then, outline the procedures that the bank should follow in order to prevent the incident from recurring in the future.Your memo should be at least 600 words in length.