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Audit Procedures For Cash
Audit Procedures For Cash
PROCEDURES FOR
CASH
What are the auditor’s
primary concerns with
regards to cash?
Major Cash Assertions
o EXISTENCE
-Are all recorded cash accounts exist at a given date?
o COMPLETENESS
-Areall cash transactions and account balances that should be
presented have been included in the financial statements?
PRESENTATION AND DISCLOSURE
-Are all components of the financial statements and other
transactions and events are accurately classified, clearly
described, and disclosed?
Major Cash Assertions
o CONFIRMATION
-Primary audit procedure used in auditing cash
balances
Steps in Confirmation
1. Client’s Permission
2. Confirmation Letter
3. Review and reconciliation of the reported balances and
confirmed balances
Cash Audit Procedures
o RECONCILIATION
-Recalculation and testing the underlying information in the
company’s bank reconciliations
-To bridge the gap between book and bank balance
Steps in Reconciliation
1. Obtaining and reviewing the bank statements & related
information
2. Recalculation and reconciliation
Cash Audit Procedures
o CLASSIFICATION
-Test for the correct classification of cash
-Examination of agreements to ensure proper
classifications
Steps in Classification
1.Gather Related Information
2.Examination of Contractual agreements
Cash Audit Procedures
o INQUIRY
-Asking few questions to employees and management
regarding cash balances
Steps in Inquiry
1.Identify Respondents or persons to be asked
2.Review gathered data and identify its implications
Cash Audit Procedures
CASH COUNT
-Count all cash on hand at the client’s premises. If
cash is located in multiple places, count cash
simultaneously to avoid double counting.
Additional Cash Audit Procedures
is an irregularity whereby an
overstatement of cash is created by a
cash transfer between bank accounts.
Why commit Kiting?
National Canadian
CHEQUE
Kiting Example
The bookkeeper records the deposit in the cash
receipts journal but does not record the cheque in the
cash payments journal. He also fails to list the
cheque as outstanding on the National Bank
reconciliation.