Audit Program Area: Cash Disbursements and Related

AUDIT PROCEDURES

General Audit Objectives:

1.Effectiveness and efficiency
2.Reliability of financial and operational records
3.Compliance to laws and regulations
4.Assets are safeguarded

Note: See the APG Other for compliance steps

associated with selected subject matters herein.

The sections of this APG in the areas of cash

disbursements are;
A.Test of Cash Disbursements
B. Sales Taxes
A. TEST OF CASH DISBURSEMENTS
Specific Audit Objectives regarding cash disbursement
activity include:
-to ensure that checks are properly controlled and
issued properly
-to ensure that checks are properly signed
-to ensure that the purchase of goods and services and
fixed assets are properly approved and are intended for
XYZ use only, and contain supporting documentation
as is appropriate
-to ensure that the receipt of such goods and services
are bonafide and all documents associated with the
transaction agree with one another
-to ensure that all records and files are accurate,
complete, and kept up-to-date.
-to make a distinction where applicable, between XYZ
policy and State policy and note that distinction within
the work papers and written comments and reports.

1.Obtain cash disbursements for the year and do the

following; Note: Interim testing should preferably start
prior to year-end.
a.Observe and validate that disbursements are filed
sequentially
b.Observe and validate that checks are pre-numbered
and filed in a safe location
c.Observe and validate the sequential numbering of
checks to ensure that all checks are recorded and used
in order, and in so doing, make inquiry as to whether
and to what extent there are missing or duplicate
checks
d.Select a 1% random sample of disbursements from
the system’s sequential list. Judgementally increase
the sample size based upon testing results and/or other
factors. Note: this sample size was pre-approved by
the District Auditor and the external audit firm. Do
the following:

(1)     Print out random sample of checks from

system’s computer program
(2) Ensure two (2) signatures on checks per XYZ
Policy xxx
(3) Verify Request for Services (RFS) or Internal
Purchase Order (IPO) is completed properly and
attached;
(a)     Ensure date is same day or prior to
date on invoice
(b)     Ensure teacher and principal signed
RFS or IPO
(4) Verify Check Requisition (CKR) is attached and
authorized by teacher and principal
(a) Ensure student officer also signs on
donations made from student funds
(5) Ensure receipt of items purchased
(a) Verify packing slip or other documentation
is authorized and attached
(6) Verify each check issued is properly supported by
an original, itemized invoice or receipt in compliance
with XYZ Policy xxx
(a) Ensure there is an explanation if invoice or
receipt is a copy
(7) Verify CKR is properly completed:
(a) Verify check number at top
(b) Verify account number(s) listed
(c) Verify invoice number or purchase order
number listed
(8) Verify evidence of compliance that the bookkeeper
footed the invoice and took discounts when available

(9) Verify name of vendor and amount of invoice match

the CKR and what is posted
(a) Ensure proper expenditure from Activity
Accounts
(b) Ensure merchandise is appropriate for
vendor
(c) Ensure changes are authorized
(10) Verify obligations are paid timely, within 30 days

(a) Ensure no finance charges paid

2.Obtain judgmental sample of disbursements of

$1,000 or more from the system’s computer program
(Note: include those items selected above in 1.d. that
fall within this category) and do the following:

a.Verify capital assets of $1,000 or more were

purchased through the District’s Purchase Order
System.
b.Ensure invoices for equipment were not split in order
to avoid utilizing a District Purchase Order
c.Ensure purchases falling within XYZ bid requirements
are properly documented per XYZ Policy xx

3.Ensure individuals paid from Activity Accounts for

services performed are included in the 1099 list and
that they are not employees.

4.Inquire and observe that voided checks are properly

defaced and authorized

5.Investigate any irregularities and comment on

noncompliance

6.Compare cash disbursements FY xx to xx by type

and in total and investigate any unreasonable increases
or decreases

7.Complete other tests of

disbursements as deemed
necessary

8. Write up PRC’s and brief the school on findings;

distinguishing between PRC’s regarding XYZ policy
versus State
B. SALES TAX PAYABLE
Specific Audit Objectives regarding sales tax payable;

-to ensure that sales taxes are handled properly as to

items that require sales tax to be remitted, versus other
items that do not
-to ensure that sales tax is properly remitted to the
taxing body in a timely manner
Note: the following tests will be applied to the
previously selected samples in this APG. Using
judgment via inquiry and observation within items
selected for testing in the disbursement’s sample;

1.Ensure sales tax is not paid on classroom supplies

and
curriculum supplies

2.Ensure sales tax is paid to vendor on all items for

resale
a.Fund-raiser supplies
b.Parts sold to the public in automobile repair classes

c.Concession stand sales at athletic and social events

d.School store supplies

e.Verify sales tax paid on staff
supplies or gifts

3.Ensure sales tax payable

account was properly posted for sales tax not paid to
vendor

4.Inquire and observe that sales tax due was paid to

Dept of Revenue by Jan 20
(under $500) or Jan 20 and
July 20 (over $500)

5.Inquire and observe whether or to what extent any

penalty or interest was paid for non-remittance.

6.Investigate any irregularities

and comment on any lack of compliance

7.Compare sales tax payable FY xx to xx and

investigate unreasonable significant
increases/decreases

8.Complete other tests of sales tax payable as deemed

necessary

9. Write up PRC’s and brief the school on findings;

distinguishing between PRC’s regarding XYZ policy
versus the State.
 Auditor
CONTROL OBJECTIVES (IF NONE THEN DELETE COLUMN) WP Ref Initials
Time Date Date Checked
Spent Expected Finished Remarks By: