Page 182 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes Stating that it has been able to recover most of the embezzled amounts, Wipro, which is
listed on the New York Stock Exchange, in its latest disclosure to the US Securities and
Exchange Commission, said its audit panel has concluded that mistakes were committed
in certain accounting entries and that they were also not supported by any documents.

“We and our independent registered public accounting firm also identified the lack of
internal controls that gave rise to the embezzlement and financial statement misstatements

as material weaknesses in internal control over financial reporting,” Wipro said in its

disclosure to SEC. The material weaknesses related to sharing of online banking access
passwords and Wipro’s internal accounting system passwords by certain employees
within the finance and accounting departments including those responsible for external

fi nancial reporting.
There was lack of effective controls over recording of journal entries, including inadequate
documentation which resulted in ineffective controls over bank reconciliation statements,
exchange rate fluctuation accounts and outstanding liabilities accounts and also there was

lack of timely and adequate reconciliation and review of period and end reinstatement
of foreign currency inter-company and unit balances, including recording of appropriate
adjustments. Also, segregation of duties with respect to recording and initiating banking
payments was found insuffi cient.

Source: http://www.thehindubusinessline.in/2010/11/17/stories/2010111753810100.htm

13.4 Summary

z The bank reconciliation statement is prepared as on a particular date to reconcile the
differences between the check book and pass book by identifying the causes of difference
and showing their impact.
z There are a lot of reasons due to which the balances of a cash book and pass book do not
match, then the bank reconciliation statement is prepared to reconcile both the balances.
z The bank reconciliation statement facilitates checking of errors and frauds in the books of
accounts.

13.5 Keywords

Bank Overdraft: If the bank statement shows the debit balance at a particular point of time it is
known as overdraft.
Bills Receivable: An instrument in writing containing an unconditional order, signed by the
maker directing a certain person to pay a certain sum of money to certain person or the bearer of
the instrument.

Bank Statement: It gives the details of transactions between the bank and customer.]
Clearing of cheque: Collection of the amount of cheque by the bank.
Dishonor of Bill: A situation when the acceptor of the bill refuse to pay the amount or otherwise
unable to do so.

Pay in Slip: Documents supporting the cheque deposited in bank.
Presentation of cheque: Depositing the cheque into bank for receiving payment.

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