CASH
Risks • Cash transactions may not be recorded accurately • Cash may not exist
Steps
1. Confirm selected bank accounts and special arrangements
Select bank accounts for confirmation in order to obtain a moderate to low level of assurance that the aforementioned audit objectives are achieved. Bank confirmations should be sent to all banking relationships to identify accounts not included in the general ledger.
Confirmation requests should be sent under our control and, second requests and, where warranted, third requests should be mailed when responses to confirmation requests have not been received within a reasonable time.
Consider sending a special inquiry letter to ascertain the existence of special
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Trace to supporting documentation as necessary; and (cut-off)
vi) investigate items such as, long outstanding items, dishonored checks and significant adjustments in the subsequent month, and record adjustments as necessary (accuracy and existence/occurrence).
e) review client 's bank reconciliation for review and approval by appropriate management and timely completion of reconciliation.
ACCOUNT RECEIVABLE
Risks ➢ The accounts receivable listing or individual balances may be inaccurate ➢ Accounts receivable balances may not exist ➢ Accounts receivable may not be collectible ➢ Bad debts write-offs may not be valid ➢ Sales transactions may be processed in the wrong period
Steps
1. Agree a detailed listing of accounts receivable to the summary
Obtain a detailed listing of accounts receivable balances (aged by customer, if possible) and:
a) trace totals to the comparative summary of accounts receivable balances;
b) select reconciling items in order to obtain a moderate to low level of assurance that accuracy is achieved and i) trace
- The successor should review previous audits in order to whether problems exist that may impact the successor’s acceptance of the audit. Also, the successor should review previous audits in order to have confidence in the current/past figures presented on the client’s financial
• Reason - Tellers must have examined the check carefully, considered legal and Credit Union requirements,
Also he may conduct bank reconciliations on pertinent accounts to make sure no discrepancies or misstatements are found. The auditor should also perform vertical and horizontal analysis for the income statements and balance sheets by the use of ratios.
Review credit memoranda for sales returns and allowances through the last day of fieldwork to determine if an adjustment is needed to record the items as of year-end
a majority of large banks require auditors to use electronic cash confirmation requests and, as a
14. In which paragraph of the standard audit report does the auditor communicate to the user that certain combining fund information in the financial statements is not part of the basic financial statements, but that such information has been subjected to auditing procedures and, in his or her opinion, is fairly presented in all material respects in relation to the basic financial statements?
Individuals should take the time to carefully review their bank statement in order to help secure their own accounts and the things that banks overlook.
1. Obtain an aged trial balance of individual customer accounts. Recalculate the total and trace to the general ledger control account.
Objective: Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.
Confirmation is the process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions. It describes the concept of assessing inherent and control risks, determining the acceptable level of detection risk, and designing an audit program to achieve an appropriately low level of audit risk. The auditor uses the audit risk assessment in determining the audit procedures to be applied, including whether they should include confirmation. The greater the combined assessed level of inherent and control risk, the greater the assurance that the auditor needs from substantive tests related to a financial statement assertion.
I authenticated that funding took place in compliance with the Anti-Deficiency Act and all other applicable regulations. For example, I reconciled costs on reimbursable agreements, and verified and ensured that the status of the funds were COCD. I exercised due caution and diligence in performing daily advance payment posting to the proper customer. I paid attention to detail in performing daily funds certification duties for Solely Travel Reimbursable Agreements involving analyzing budgeted versus actual expenses, reviewing processed refunds, certifying funds, reviewing collections and account receivables. I managed to review aging account receivables to avoid customer delinquency; I also analyzed unused funds and advance payments to ensure that overpayments were returned to the appropriate customer by communicating directly with them and verifying their return
Examine list of accounts previously written off and determine efficacy of follow-up procedures, tracing amounts into accounting records (S‑9).
At the beginning of the winter quarter I set as a goal to improve my skills preparing bank reconciliations. I choose this goal because I was always confused in the time of elaborating it indeed, I could not difference outstanding check and checks in transit. Moreover, the time that I spent trying to solve these types of problems was excessive. Now at the end of the Winter quarter, I feel a little more relieve about the process of doing bank reconciliation, indeed I feel happy and proud of myself because now I do know how to difference outstanding check and deposit in transit. In addition, I was able to reduce the time spent solving these problems, which makes me happy. Moreover, I learned how to
The personnel and payroll cycle includes the hiring of employees, recording hours worked, withholding and, recording of taxes, distributing payment for work performed, and properly documenting the termination of employees. Payroll can be a significant expense for a company and without proper internal controls can be vulnerable to fraud. Some common types of the fraud within the payroll cycle consist of ghost employees, claiming unworked hours, and pay rate alteration. The objective of a payroll audit is to determine if the current balances in the audit period are fairly stated and in accordance with accounting principles. According Arens, Elder, and Beasley, “Tests of controls and substantive tests of transactions procedures are the most important means of verifying account balances in the payroll and personnel cycle” (2012, p. 664). An
[2]. If the amount confirmed differs from the account balance, the following should be done: