illegal practice in which a cash shortage is concealed by exploiting the time required for a check to clear. Assume  XYZ Company has its home office on Long Island and a branch office in Chicago. The company has accounts with Long Island and Chicago banks. There is a shortage of $50,000 in the Long Island bank. The corporate bookkeeper covers this shortage by drawing a check on December 30, 2000, on the Chicago bank and depositing it to the account in the Long Island bank on the same day. The check is not entered as a cash disbursement in the current year. Rather, the transaction is recorded on January 2, 2001, and the check clears the Chicago bank on January 3, 2001. Unless the discrepancy is found, the Long Island bank balance and book balance reconcile on December 31, 2000, but do not reconcile on January 2, 2001. The auditor can uncover this irregularity by examining bank transfers prior to and after year-end to ascertain that the entry on the books is recorded in the same accounting period as the check is dated and the deposit in the Long Island bank is made. A schedule of interbank transfers should be made showing transfers of funds between bank accounts for several days before and after earend.Included in the schedule are the dates of withdrawal and deposit per books and per bank. The CPA should trace transfer checks in transit at the balance sheet date to outstanding checks and deposits in transit in the respective bank reconciliations. The accountant should verify the deposit date of all transfers by tracing the deposit to the cutoff bank statement for the receiving bank.