Auditing Casb

Various procedures used to audit cash

 Auditor would desire high level of assurance in relation to cash
 The acceptable level of detection risk for cash would be relatively low
 Auditor will generally use a test of balances approach
AICPA Standard Bank Confirmation
 Form developed by AICPA used in all financial statement audits
 Mailed to each bank in which client has or had accounts
 Requests information regarding balances, loans, & restrictions on cash balances
R & a-management asserts that cash reported on balance sheet belongs to client
 Inquire of management if there are restrictions on cash .
 Confirm with bank, using Standard AICPA Bank Confirmation, that there are no restnc-
tions on cash such as compensating balances

Focus on 104
Evidence - Module 3

Auditing Casb (continued)

V-management asserts that cash is reported on balance sheet in correct amount
 Confirm balance per bank using Standard AICPA Bank Confirmation
 Compare amount on confirmation to amount on bank reconciliation
 Compare ending balance on bank reconciliation to schedule of cash balances
 Compare total amount from schedule of cash balances to amount reported on balance
sheet
 Observe counts of cash on hand
 Recalculate amounts on bank reconciliation
 Examine interbank transfer schedule to verify absence of kiting

C-management asserts that cash reported on balance sheet represents all of the company's
cash & that all transactions involving cash were recorded in the appropriate period
 Confirm that reconcilinq items are reported in appropriate period using bank cutoff state-
ment
 Compare deposits in transit on bank reconciliation to deposits reported in the cutoff
statement

Focus on
Evidence - Module 3
105
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