Exam 17: Audit of Cash Balances

Outline the audit procedures that would be performed when testing electronic receipts and payments.

10)A)Distinguish between i)risks of error,ii)risks of fraud,and iii)risks of inadequate presentation or disclosure of financial information. B)For each of the three types of risks described in A),provide three examples of major risks of error or fraud in the cash cycle.

When examining the bank reconciliation for the imprest payroll account,it is normal for the only reconciling item to be

A)Describe each of the major types of cash accounts maintained by business entities.B)Discuss the advantages of using an imprest bank account for payroll transactions.

A)Explain what is meant by a cutoff bank statement and discuss the purpose of the cutoff bank statement in the audit of cash.B)Explain the purpose of testing the client's bank reconciliation and discuss the major audit procedures involved.

There is a greater risk of defalcation for cash than for other types of assets because

A four-column proof of cash can be performed for

Testing to ensure that bank transfers are recorded in both the receiving and disbursing banks helps to detect evidence

If the auditor does not obtain a cutoff statement directly from the bank for testing,an alternative procedure that the auditor can use is to

You are the auditor of Brody Grass Inc.The CEO expressed a concern that the audit fees for the year were very high.You explained that this is largely due to poor internal controls in the cash and transaction cycle and that the audit fees could decrease if better controls were in place. Provide 5 examples of general cash account controls that Brody Grass Inc.could implement.

Under what circumstances would an auditor prepare a proof of cash?

The auditor has determined exchange rates used by the client to present cash in foreign currencies and has recalculated the amounts.Which audit assertion is associated with this audit procedure?

From an audit perspective,an imprest bank account at a client can

State the important factors the auditor should consider while understanding internal controls for cash.

A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are

Disbursements on the bank transfer schedule should be correctly included in or excluded from year-end bank reconciliations as outstanding cheques.Understating outstanding cheques on the bank reconciliation indicates

Which of the following statements best describes the position of cash on the balance sheet at most organizations that utilize effective cash management practices?

What type of audit test is a proof of cash?

A)"Failure to bill a customer" is an example of an error that results in the failure to receive cash,but would not be discovered as part of the audit of the bank reconciliation.State three other examples of errors or irregularities that result in the improper payment of,or failure to receive,cash,but would not be discovered during the audit of the bank reconciliation.How are these types of misstatements normally uncovered in the audit? B)State three examples of errors or irregularities that normally would be uncovered during the audit of the bank reconciliation.

A)Explain what is meant by kiting and discuss how it is performed.B)Discuss how an auditor can test for kiting.