Fin. Audit 2 - 18A4 - Audit Planning on Cash & Cash Eq. (II)

Which of the following balance-related audit objectives typically is assessed as having high inherent risk for cash?

• Existence.

• Detail tie-in.

• Cutoff.

• Presentation and disclosure.

Which of the following misstatements is most likely to be uncovered during an audit of a client’s bank reconciliation?

• Payment to an employee for more than the hours actually worked.

• Failure to record a collection of a note receivable by the bank on the client’s behalf.

• Duplicate payment of a vendor’s invoice.

• Billing a customer at a lower price than indicated by company policy.

A proof of cash is not an effective procedure for identifying which of the following types of misstatements?

• All amounts that were paid by the bank were recorded.

• All recorded disbursements were paid by the bank.

• All recorded cash receipts were deposited.

• Some checks were written for incorrect amounts.

Auditors would prepare a proof of cash when the client has material weaknesses in (a)   over cash.

(a)   is the transfer of money from one bank account to another and improperly recording the transfer so that the amount is recorded as an asset in both accounts.