Audit Chapter 23

Front 1

Name 2 cash mistatements of the sales & collection cycle that would not be discovered from an audit of the bank reconciliation

Back 1

failure to bill a customer

an embezzlement of cash by intercepting cash receipts from customers before they are recorded.

Front 2

Name 3 cash mistatements of the acqusitions & Payment cycle that would not be discovered from an audit of the bank reconciliation

Back 2

duplicate payment of an vendors invoice

improper payments of officers personel expenditures

payment of raw materials that were not received

Front 3

Name a cash mistatements of the payroll and personel cycle that would not be discovered from an audit of the bank reconciliation

Back 3

payment to an employee for more hours than he or she worked.

Front 4

Name a cash mistatements of the capital acqusition cycle that would not be discovered from an audit of the bank reconciliation

Back 4

payment of interest to a related party for an amount in excess of the going rate

Front 5

Name some misstatements that would be discovered during an audit of the bank reconciliation

Back 5

failure to include a check that has not cleared the bank on the outstanding check list

cash received by the client subsequent to the balance sheet date but recorded as cash receipts in the current year

deposits recorded as cash receipts near the y/e, deposited in the bank in the same month, and included in the bank rec as deposits in transit

payments on notes payable debited directly to the bank but not entered in the clients records

Front 6

General Cash account

Back 6

almost a receipts and disbursements flow through this account

Front 7

Imprest accounts

Back 7

payroll account

cash receipts or disbursements accts

Front 8

Cash equivalents

Back 8

Highly liquid - time deposits, cd's, money markets

only included incash if short term and readily convertible to cash, and insignificant ir risk

Front 9

What 5 of the 8 AO's are apllicable

Back 9

existence, completeness, accuracy, cutoff, and detail tie in

Front 10

client business risk may arise from

Back 10

inappropriate cash mgmt policies or handling of funds held in trust

Front 11

why is inherent risk high for cash existence, completeness, and accuracy

Back 11

cash is more supceptible to theft

Front 12

2 categories of internal controls over y/e cash balances

Back 12

1. controls over the transaction cycles affecting the recording of cash receipts
2. independent bank reconciliations

Front 13

detail tie in

(balance related audit objective)

Back 13

cash in the bank as stated on the reconciliation foots correctly and agrees with the general ledger

Front 14

existence
(balance related audit objective)

Back 14

cash in the bank as stated on the reconciliation exists

Front 15

completeness

(balance related audit objective)

Back 15

existing cash in the bank is recorded

Front 16

accuracy
(balance related audit objective)

Back 16

cash in the bank as stated on the reconciliation is accurate

Front 17

cut off
(balance related audit objective)

Back 17

cash receipts and cash disbursements are recorded in the proper period

Front 18

Detail tie in

(common tests of details of balances procedures)

Back 18

foot the outstanding check list and deposits in transit
prove the bank reconciliation as to additions and subtractions including all reconciliong items
trace the book balance on the reconciliation to the general ledger

Front 19

existence, completeness, accuracy

(common tests of details of balances procedures)

Back 19

receipt and tests of a bank confirmation
receipt and tests of a cutoff bank statement
extended tests of the bank reconciliation
proof of cash
tests for kiting

Front 20

cut off (cash receipts)

(common tests of details of balances procedures)

Back 20

count the cash on hand on the last day of the year and subsequently trace to deposits in transit and cash receipts journal
Trace deposits in transit to subsequent period bank statement (cut off bank statement)

Front 21

cut off (cash disbursements)

(common tests of details of balances procedures)

Back 21

Record the last check number used on the last day of the year and subsequently trace the outstanding checks and the cash disbursements journal
Trace outstanding checks to subsequent period bank statement

Front 22

what othe objectives do auditors also follow for cash

Back 22

four presentation and disclosure objectives including review of minutes and loan agreements to determine if there are restrictions on cash that must be disclosed.

Front 23

What if a bank does not respond to a confirmation request

Back 23

the auditor should send a second request or have the client communicate with the bank to complete the request

Front 24

Standard bank confirmation form

Back 24

form approved by the AICPA and agreed on by the American Bankers Association

standard form to confirm account balance information with financial institutions

Front 25

What are banks required to confirm

Back 25

loan info and bank balances

Front 26

what are banks ok not to disclose

Back 26

open lines of credit, compensating balance requiremnets, contingent liabilities for guarenteeing the loans of others

Front 27

cut off bank statement

Back 27

partial-period bank statement and the related cancelled checks , duplicate deposit slips, and other documents included in the bank statements mailed by the bank to the CPA office

Front 28

When there are inadequate internal controls, especially the improper segregation of duties between the handling of cash and the recording of cash, or lack of an independently prepared bank reconciliation the auditor must

Back 28

extend the procedures in the audit of y/e cash to determine the posiibility of a material fraud.

Front 29

What procedures may uncover fraud

Back 29

confirmation of accounts receivable
tests performed to detect lapping
review of the general ledger entries in the cash account for unusual items
comparison of customer orders to sales and subsequent cash receipts
examination of approvals and supporting documentation for bad debts and sales returns and allowances

Front 30

when is it appropriate to perform extended tests of the y/e bank rec

Back 30

when the auditor believes it may be intentionally misstated

Front 31

what does a proof of cash determine...

Back 31

if the following were done
.all recorded cash receipts were deposited
.all deposits in the bank were recorded in the accounting records
. all recorded cash disbursements were paid by the bank
. all amounts that were paid by the bank were recorded

Front 32

four tasks of the proof of cash

Back 32

1. reconcile the balance on the bank stmt with the GL balance at the beg of the proof of cash period
2. reconcile cash receipts deposited per the bank with receipts recorded in the cash receiptsjournal for a given period
3. reconcile cancelled checks clearing the bank with those recorde in the cash disbursements journal
4. reconcile the balance on the bank statement with the general ledger balance at the end of the proof of cash period.

Front 33

Kiting

Back 33

theft of cash, transfering money from one bank to another and incorrectly recording the transaction

Front 34

What should be audited on the interbank transfer schedule

Back 34

the accuracy of the information on the interbank transfer schedule should be verified
.the interbank transfers must be reorded in both the rec and disbursing banks
.the date of the recording of the disbursements and receipts for each transfer must be in the same fiscal year
.disbursements on the interbank transfer schedule should be correctly included in or excluded from year end bank recs as outstanding checks
.receipts on the interbank transfer schedule should be correctly included in or excluded from y/e bank recs as deposits in transit.

Front 35

primary procedures for auditing petty cash

Back 35

.foot the petty cash vouchers
.account for a sequence of petty cash vouchers
.examine the petty cash vouchers for auth and cancellation
.examine the attached documentation, which often includes cash register tapes, invoices, receipts, for reasonableness