Question

During the preparation of the bank reconciliation for Building Concepts Co., Joel Kimmel, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written by Building Concepts Co. as $329. Joel has decided not to notify the bank but wait for the bank to detect the error. Joel plans to record the $2,961 error as Other Income if the bank fails to detect the error within the next three months.
Discuss whether Joel is behaving in a professional manner.

Answer 1

Answer:

Joel Kimmel in this example did not behave in a professional way

Explanation:

From the example given, Joel Kimmel is not behaving in professional manner .

The function  of  Bank Reconciliation Statement at normal interval is to restore the differences in  the bank cash book and pass book

When the mistake was discovered by Joel, it is his responsibility to make it known to the manager of the bank bank and do the right corrections of  balance in the pass book of the bank.

It is not advisable to treat  a bank business income as any kind of income  which is not right, and this will be a draw back in profit of the desired time.

When the  check receiver or customer make a complain  about the error found, The  Lone Peak National Bank will always notice this error.

In bank statement  their message always foes like this “ Bring to the notice of bank , if any discrepancy is found.

If Joel Kimmel did not notify the bank willingly  it will be seem as a fraud and it will affect the reputation of the organization.

Answer 2

Answer:

Joel is behaving in a totally unprofessional & unethical manner

Explanation:

As assistant controller, Joel Kimmel's job specification & responsibility includes financial statement preparation & combination, putting of internal controls in place, detailed analysis & reporting of cost variance, acts as the go-between with external auditors amongst other such responsibilities.

As such, when Joel discovered the cost discrepancy during the reconciliation, it was actually his responsibility to call the bank's attention to the variance. This is something that clearly falls under his job specification & can be considered as neglect of duty. Joel's decision defeats the very purpose of bank reconciliation, which is to correct any such discrepancy & to the ensure the rectification of transactions. Most importantly, the decision Joel plans to take is very unethical & is against standard accounting practices

We can therefore, say that Joel's decision is thoroughly unethical & unprofessional