![]() Obtain reconciliations of bank balances and consider reconciling bank activity.Įxistence, occurrence, accuracy, cutoff, and rights Obtain analyses of cash balances and reconcile them to general ledger.Ĭonfirm cash balances with financial institutions. Investigate any checks representing large or unusual payments to related parties.Įvaluate proper financial statement presentation and disclosure of cash.įIGURE 10.3 Objectives of Major Substantive Procedures for Cash Transactions and Balances Verify the client’s cutoff of cash receipts and cash disbursements.Īnalyze bank transfers for the last week of the audit year and the first week of the following year. Obtain a cutoff bank statement containing transactions of at least seven business days subsequent to the balance sheet date. Obtain or prepare reconciliations of bank (financial institution) accounts as of the balance sheet date and consider the need to reconcile bank activity for additional months. Send standard confirmation forms to financial institutions to verify amounts on deposit. Obtain analyses of cash balances and reconcile them to the general ledger. ![]() Perform further audit procedures-substantive procedures for cash transactions and balances. If necessary, revise the risk of material misstatement based on the results of tests of controls. Test the accounting records and reconciliations by reperformance.Ĭompare the details of a sample of cash receipts listings to the cash receipts journal, accounts receivable postings, and authenticated deposit slips.Ĭompare the details of a sample of recorded disbursements in the cash payments journal to account payable postings, purchase orders, receiving reports, invoices, and paid checks. ![]() Perform further audit procedures-tests of controls. ![]() Obtain an understanding of internal control over cash.Īssess the risks of material misstatement and design further audit procedures. Use the understanding of the client and its environment to consider inherent risks, Selection of the most appropriate procedures for a particular audit will be guided by the nature of the controls that have been implemented and by the results of the auditors' risk assessment process. The following steps indicate the general pattern of work performed by the auditors in the audit of cash. ![]()
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