</div>
<div class="block" data-type="SimpleTags" data-format="markup">
<p>‘When I was auditing revenue I noticed something strange. Heron Co’s revenue, which is almost entirely cash-based, is recognised at $5·5 million in the draft financial statements. However, the accounting system shows that till receipts for cash paid by customers amount to only $3·5 million.</p>
</div>
<div class="block" data-type="MaterialAudio">
<audio-player type="audio/mp3" src=https://www.acowtancy.com/exams/acca-aaa/subject/a2-money-laundering/paper-question/"https://audioboom.com/posts/1576236.mp3">
</div>
<div class="block" data-type="SimpleTags" data-format="markup">
<p>This seemed odd, so I questioned Ava Gull, the financial controller about this. She said that Jack Heron, the company’s owner, deals with cash receipts and posts through journals dealing with cash and revenue. Ava asked Jack the reason for these journals but he refused to give an explanation.</p>
</div>
<div class="block" data-type="MaterialAudio">
<audio-player type="audio/mp3" src=https://www.acowtancy.com/exams/acca-aaa/subject/a2-money-laundering/paper-question/"https://audioboom.com/posts/1576240.mp3">
</div>
<div class="block" data-type="SimpleTags" data-format="markup">
<p>‘While auditing cash, I noticed a payment of $2 million made by electronic transfer from the company’s bank account to an overseas financial institution. The bank statement showed that the transfer was authorised by Jack Heron, but no other documentation regarding the transfer was available.</p>
</div>
<div class="block" data-type="SimpleTags" data-format="markup">
<p>‘Alarmed by the size of this transaction, and the lack of evidence to support it, I questioned Jack Heron, asking him about the source of cash receipts and the reason for electronic transfer. He would not give any answers and became quite aggressive.’</p>
<p><b>Required:</b></p>
<p>(i) Discuss the implications of the circumstances described in the audit senior’s note; and (6 marks)</p>
</div>
">