Audit assertions and procedures on Cash balances Identify and demonstrate the audit assertions and different approaches to the obtaining audit evidence for an audit of cash balances in a financial statement audit
In the performance of the audit of cash the auditor is most concerned the existence, valuation, and rights assertions. The audit of cash may use the following approaches:
? Observe the client's handling of the petty cash fund and the control over incoming cash and cash storage. Observe the process of cash received in the mailroom, deposits to the bank and reconciliation by a separate individual.
? Physically count the petty cash, cash in drawers and cash in safes.
? Examine documents such as the bank statement.
? Make inquiries of personnel concerning the handling of daily deposits or the mail receipts.
? Confirm the bank balance with financial institutions using proper confirmation procedures.
? Recalculate the bank reconciliation computation trace the book balance to the general ledger.
? Inquire of materially aged outstanding checks and deposits in transit.
? Trace outstanding checks and deposits in transit clearing subsequent bank statements from a qualified source.
? Vouch material and unusual entries in the cash account.
? Perform an analysis of bank transfers at or near cutoff.
? Use analytical procedures to determine the reasonableness of the reported cash balance.
This response is only intended to be a sample. The instructor must evaluate the quality of the student responses.
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