G – CASA SI BANCA / Cash and bank

Done/ No/

paper ref.
Not appl.

Working
Task description

1. Risk/control issues
Enquire those in charge about the controls which function in this area. Enquire about the application of the following
controls. Document the information obtained from the interviews in a working paper. Where applicable test the
application and functioning of controls (document the results of tests in the working paper). Draw a conclusion
regarding the control over this area and the level of reliance to be placed on controls (high, medium, low).
Is there a limit established for cash transactions (value of any one transaction, value of total transactions during one
day)?
Is there a limit established for maximum amount to be available in cash in the cashier?
Are overdraft facilities authorized and correctly operated within the limits defined by management?
Are fund transfers and automated methods of effecting banking transactions valid and authorized?
Are all bank accounts only established for a defined and authorized purpose?
Are all the prevailing banking terms and conditions optimized in terms of account type, transaction levels, interest
payable on balances, levels of charges?
Are there written procedures governing the set up and use of banking facilities established and implemented?
Are bank accounts (bank statements) regularly reconciled with accounting records?
Are excess balances promptly identified and authorized for transfer?
Are inter-account movements optimized to the benefit of the organization or to avoid shortfalls?
Does the company ensure that unauthorized overdrafts are avoided?
What prevents the processing of a transaction that would place an in account in overdraft?
Are overdraft limits established and if so, what prevents the limit being exceeded?
What controls are in place over the storage and usage of blank company cheques, and are all company cheques
accounted for?
2. Agree list of cash and bank accounts to the trial balance (A)
Obtain a list with all cash and bank accounts balances, check the mathematical accuracy of the total and trace the
total against cash and bank as per trial balance. Ensure there is no difference between breakdown and cash and
bank account balance as per trial balance.
3. Test cash and bank accounts (A, E, CO)
Trace all the items from the list obtained above against supporting documents (cash register, bank statements).
Investigate all the differences, if any.
4. Confirm bank accounts and special arrangements (C, A, E, RO)
Send request of confirmation of bank balances to respective banks, obtain confirmation letter from them and trace
the amount as per confirmation against amount as per bank balances breakdown. Investigate differences, if any and
determine whether any adjustments are necessary. Assess impact of special arrangements or restrictions identified
and determine whether disclosure is appropriate.
5. Test valuation of foreign currency balances (V, A)
Obtain a list with all cash and bank accounts balances per currency and amount. Value the cash and bank accounts
balances denominated in foreign currencies using exchange rates at the audit date and trace the total against cash
and bank as per trial balance.
6. Test cut-off of cash transactions (CO, A)
Examine transactions in the cash register for a period before and after the balance sheet date and check that they
are recorded in the correct period.
7. Test cut-off of interest income (CO, A)
Check the interest income for all bank accounts balances as per bank statements and make sure that all interest income
is correctly identified and recorded in profit and loss account for the period they are related to. Make sure that interest
income for all bank accounts are reasonably calculated by the bank. Re-perform the calculation of interest income using
the average bank balances and the interest rate granted by the bank for current accounts held at that every bank.
8. Consider financial position of depositories (V, PD)
Obtain a list with all bank balances by bank name, amount and currency. Check that cash is held in banks with low
risk of liquidity. Determine whether any special inquiries should be made regarding the financial conditions of
depositories where cash is held.