Exam 17: Audit of Cash Balances

Which of the following misstatements in the payroll cycle could be detected during the audit of payroll transactions (but would not be discovered as part of the audit of the bank reconciliation)?

The general cash account is considered significant in almost all audits

Petty cash tests can ordinarily be performed at any time during the year, but as a matter of convenience they are typically done

A) Discuss the methodology for designing tests of details of balances for cash in the bank. B) An effective monthly bank reconciliation by client personnel includes nine procedures. List these nine bank reconciliation procedures. C) Discuss two analytical procedures commonly performed during the audit of the cash account.

What type of audit test is a proof of cash?

Which of the following situations would indicate a susceptibility to fraud that pertains to theft of cash?

What is the best way to prevent potential alteration, deletion, or addition of cancelled cheques, duplicate deposit slips, or other documents provided with the bank statement?

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

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.

The most important internal control for petty cash is

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

Following are situations that an auditor might find by means of tests of controls or tests of details of cash balances for a company with a December year end. A) The accountant did not record or deposit a cash receipt for $50 000 that was received on December 28. Cash is prelisted by the receptionist. B) Cheques prepared up to January 6 were dated December 31 and recorded in the cash disbursements journal. C) A cheque was issued for office supplies that were never received by the client. Required: List a substantive audit procedure that could uncover each of the preceding situations.

The reason for testing the client's bank reconciliation is to verify whether the client's recorded bank balance is the same amount as the actual cash in the bank, except for deposits in transit, cheques outstanding, and other reconciling items. The information needed to complete the tests of the reconciliation are provided by the

During the audit of cash, the focus of the audit is to

After the bank confirmation has been received by the auditor, the auditor should

What audit objective is associated with the comparison of disbursement and receipt information on a bank transfer schedule to the cash disbursements and cash receipts journals?

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.

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.

An auditor who is engaged to examine the financial statements of a business enterprise will request a cutoff bank statement primarily in order to

Certain types of misstatements that affect cash may be detected in the audit of tests of controls. Which of the following misstatements would be detected in the audit of the sales and collection cycle?