The auditor found weaknesses in Lucila Company's internal controls over cash transactions. The auditor obtained cash records for September and October 2020 which showed discrepancies between the company's cash books and bank statements, including unrecorded receipts and payments, erroneous bank charges and credits, and checks outstanding or in transit. The auditor will need to reconcile the cash books to the bank statements to determine the cause of the discrepancies in the cash records.
The auditor found weaknesses in Lucila Company's internal controls over cash transactions. The auditor obtained cash records for September and October 2020 which showed discrepancies between the company's cash books and bank statements, including unrecorded receipts and payments, erroneous bank charges and credits, and checks outstanding or in transit. The auditor will need to reconcile the cash books to the bank statements to determine the cause of the discrepancies in the cash records.
The auditor found weaknesses in Lucila Company's internal controls over cash transactions. The auditor obtained cash records for September and October 2020 which showed discrepancies between the company's cash books and bank statements, including unrecorded receipts and payments, erroneous bank charges and credits, and checks outstanding or in transit. The auditor will need to reconcile the cash books to the bank statements to determine the cause of the discrepancies in the cash records.
During the audit of Lucila Company, the auditor focused his
attention on cash transactions because of the weaknesses in internal control which was discovered in the preliminary evaluation, inquiries and observation. The auditor obtained the following data concerning cash records for the months of September and October 2020. a) Unadjusted book balance on 09/30/20 amounted to P2, 258,000. b) Total receipts per book in October, P1, 400,000. c) Total disbursements per book in October, P2, 400,000. d) Unadjusted bank balance on 09/30/20 amounted to P2, 100,000. e) Total credits per bank in October amounted to P1, 200,000. f) Total debits per bank in October amounted to P2, 500,000. g) NSF checks on 09/30/20 amounted to P60, 000, while on 10/31/20, it is P40, 000. h) Collection of accounts receivable not recorded by the company on 09/30/20, P30, 000 and P50, 000 on 10/31/20. i) Erroneous bank charge on 09/30/20 amounting to P10, 000 and P18, 000 on 10/31/20. j) Erroneous bank credit on 09/30/20 amounting to P7, 000 and P9, 000 on 10/31/20. k) Understatement of check in payment of rent payable on 09/30/20 amounting to P90, 000 and P120, 000 on 10/31/20. l) Deposit in transit on 09/30/20 for P130, 000. m) Outstanding checks on 10/31/20 amounting to P30, 000