Exam 17: Audit of Cash Balances

Toasted Tomato is a restaurant in Ottawa. You walk by this restaurant frequently and noticed it is usually empty. When you came in to do the audit, you were surprised to see that they had a large cash balance and high sales. Toasted Tomato might

The test of balances procedure that requires the auditor to trace the unadjusted book balance on the reconciliation to the general ledger is an attempt to satisfy the audit objective of

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?

Jane works for Middle Co. She is responsible for opening the mail and preparing the bank deposit for cheques received, which she then gives to the owner. After the owner has deposited the cash, he gives Jane the stamped bank deposit slip, which she uses to record the cash received in the accounts receivable records. How does this allocation of responsibilities affect the audit process?

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

In an effort to satisfy the completeness objective, the auditor could perform which of the following test of details of balance procedures?

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

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

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.

During the audit of cash, the focus of the audit is 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 acquisition and payment cycle?

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

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

Electronic data interchange (EDI) represents the electronic transfer of

A partial-period bank statement and the related cancelled cheques, duplicate deposit slips, and other documents included in bank statements, mailed by the bank directly to the public accounting firm's office, is called a

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)?

What is the purpose of an extended test of the bank reconciliation?

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

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

Bank reconciliations are normally verified on a 100-percent basis. Testing the reasonableness of the cash balance is therefore