audit of cash

Cash on hand maintained in different departments or business locations for small amount of disbursements and expenditures such as repairs, supplies, and other miscellaneous items

• Bank drafts

• Petty cash fund

• Cash equivalents

Cash is important to auditors primarily because of the potential for....

• fraud

• error

• liquidity

• expenditure

Which of the following is not a cash equivalent?

• cash

• Certificates of deposits

• Money market funds

• Marketable securities

 

Which of the following would be the best protection for a company that wishes to prevent the “lapping” of trade accounts receivable?

• Have customers send payments directly to the company’s depository bank.

• Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail.

• Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts.

• Request that customers’ payment checks be made payable to the company and addressed to the treasurer.

Which internal control principle prescribes the use of pre-numbered printed checks?

• Technological controls

• Establish responsibilities

• Maintain adequate records

• Divide responsibility for related transactions

 

Cash equivalents:

• Include 6-month certificates of deposit

• Include checking accounts

• Are recorded in petty cash

• Are short-term, highly liquid investment assets

Preparing a bank reconciliation on a monthly basis is an example of:

• Establishing responsibility

• Poor internal control

• Protecting assets by proving the accuracy of cash records

• Separation of duties

The reliability of the entity's control procedures over cash receipts and cash disbursement affects the nature and extent of the auditor's substantive procedure.

• true

• false

the following are audit procedure that the auditor use to detect fraudulent activity in cash account, EXCEPT

• extended bank reconciliation procedures

• proof of cash

• test of kitting

• internal control

to audit a cash account, the auditor should obtain the the document such as bank confirmation letter, bank reconciliation statement and invoice.

• true

• false