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friends
Regular
Regular

Joined: 10 Oct 2008
Location: United States
Online Status: Offline
Posts: 120

Posted: 29 Mar 2009 at 13:29 \| IP Logged

Which of the following characteristics most likely would be indicative of check kiting?

a) High turnover of employees who have access to cash

b) Many large checks that are recorded on Mondays

c) Low average balance compared to high level of deposits

d) Frequent ATM checking account withdrawals

The answer is ¡§c¡¨. I don¡¦t understand why it would be low average balance. I thought kiting will cause the disbursing bank account to be overstated. Could someone please help? Thanks

skyisthelimt
Newbie
Newbie

Joined: 12 May 2008
Location: United States
Online Status: Offline
Posts: 41

Posted: 29 Mar 2009 at 17:01 \| IP Logged

Hey,

In Kiting the number of deposits made will be more but it will not reflect in the final average balance, as for example the cheque A is deposited in ABC bank, Before this cheque gets cleared the perpetrator will write another cheque of the same amount say cheque B drawn on same bank, thus increasing and reducing the balance at the same time, thus making the actual average balance low.

HCBC
Major Contributor

Joined: 23 Apr 2008
Location: United States
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Posts: 279

Posted: 29 Mar 2009 at 22:44 \| IP Logged

the answer is c. Money is always moving around, not allowing it to accumulate but many deposits are coming in to cover others clearing...

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friends
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Joined: 10 Oct 2008
Location: United States
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Posted: 29 Mar 2009 at 22:46 \| IP Logged

Thanks!! I guess people have high bank balance don't have to do kiting...

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