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10 Cards in this Set
- Front
- Back
Cutoff bank statement
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a bank statement covering a specified number of business days after the client's balance sheet date. auditorsuse this statement to determine that checks issued on or before the balance sheet date and paid during the cutoff period were listed as outstanding on the year end bank reconciliation. another use is to determine that reconciling items shown on the year end bank reconciliation have cleared the bank within a reasonable amount of time
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derivatives
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financial instruments that derive their value from other financial instruments, underlying assets, or indexes. examples are options, forward contracts, and futures contracts
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electronic data interchange
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a computer network between companies that allows the interchange of data from one company's computer to the other's
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Kiting
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manipulations causing an amount of cash to be included simultaneously in the balance of two or more bank accounts. Kiting schemses are based onthe float period-- the time necessary for a check deposited in one bank to clear the bank on which it was drawn
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lockbox
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a post office box controlled by a company's bank at which cash remittances from customers are received. The bank picks up the remittances, immediately credits the cash to the company's bank account, and forwards the remittance advices to the company
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proof of cash
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an audit procedure that reconciles the bank's record of cash activity with the client's accounting records for a test period. the working paper used for the proof of cash is a four column bank reconciliation
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standard confirmation form
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a confirmation form, agreed to by the AICPA, the american bankers associateon, and the bank administration institute, that is designed to provide corroborating evidence about the client's account balances and outstanding loans
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voucher
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a document authorizing a cash distribution. a voucher usually has a place for the employee to initial after they have performed approval functions.
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Voucher register
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a special journal used to record liabilities for payment originatiing in a voucher system. The debit entries are the cost distribution of the transaction, and the credits are vouchers payable.
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window dressing
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action taken by the client shortly before the balance sheet date to improve the financial picture presented in the financial statements
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