part 2 audting and assurance

to ensure that the cash balance and related statement of comprehensive income entries are correctly disclosed in the financial statements in accordance with legislation and accounting standards.

To ensure that there is no unrecorded cash.

To ensure cash at bank stated on the reconciliation is accurate

To ensure that amounts are correctly recorded in the proper period

To ensure that the cash is actually in existence and belong to the company at a given date or at the year-end date

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

As one of the year-end audit procedures, the auditor instructed the client’s personnel toprepare a standard bank confirmation request for a bank account that had been closedduring the year. After the client’s treasurer had signed the request, it was mailed by theassistant treasurer. What is the major flaw in this audit procedure?

• The confirmation request was signed by the treasurer.

• Sending the request was meaningless because the account was closed before year-end.

• The request was mailed by the assistant treasurer.

• The CPA did not sign the confirmation request before it was mailed

On receiving the bank cutoff statement, the auditor should trace

• Deposits in transit on the year-end bank reconciliation to deposits in the cash receiptsjournal.

• Checks dated prior to year-end to the outstanding checks listed on the year-end bankreconciliation

• Deposits listed on the cutoff bank statement to deposits in the cash receipts journal.

• Checks dated subsequent to year-end to the outstanding checks listed on the year-endbank reconciliation.

An unrecorded check issued during the last week of the year would most likely be discovered by the auditor when

• Check register for the last month is reviewed

• Cutoff bank statement is reconciled

• Bank confirmation is reviewed.

• Search for unrecorded liabilities is performed

To gather evidence regarding the balance per bank in a bank reconciliation, an auditorwould examine all of the following except

• Cutoff bank statement

• Year-end bank statement

• Bank confirmation

• General ledger