Assertion and Related Control Activity - Cash Receipt Transactions

Question 1

Occurrence - Use of a lockbox system

Answer 1

Inquiry of management about lockbox policy.

Question 2

Occurrence - Monthly bank reconciliations prepared and independently reviewed.

Answer 2

Review of monthly bank reconciliation for indication of independent review.

Question 3

Completeness - Checks restrictively endorsed when received and daily cash list prepared

Answer 3

Observation of the endorsement of checks.

Question 4

Completeness - Daily cash receipts reconciled with posting to accounts receivable subsidiary ledger

Answer 4

Testing of the reconciliation of daily cash receipts with posting to accounts receivable subsidiary ledger.

Question 5

Completeness - Customer statements prepared on a regular basis; complaints handled independently

Answer 5

Inquiry of client personnel about handling of monthly statements and examination of resolution of complaints.

Question 6

Accuracy - Daily remittance report reconciled to control listing of remittance advices

Answer 6

Review and testing of reconciliation

Question 7

Accuracy - Monthly bank statement reconciled and independently reviewed

Answer 7

Examination of monthly bank reconciliation for independent review.

Question 8

Authorization - Procedures specifying policies for cash discounts

Answer 8

Testing of a sample of cash receipts transactions for proper cash discounts.

Question 9

Accuracy - Daily remittance report reconciled daily with postings to cash receipts journal and accounts receivable subsidiary ledger

Answer 9

Review and testing of reconciliation

Question 10

Accuracy - Monthly cash receipts journal agreed to general ledger posting

Answer 10

Review of posting from cash receipts journal to the general ledger

Question 11

Accuracy - Accounts receivable subsidiary ledger reconciled to general ledger control account

Answer 11

Examination of reconciliation of accounts receivable subsidiary ledger to general ledger control account.

Question 12

Cutoff - Use of a lockbox system or a control procedure to deposit cash receipts daily

Answer 12

Examination of cash recites for daily deposit.

Question 13

Classification - Chart of accounts

Answer 13

Tracing of cash recites from listing to cash receipts journal for proper classification. Review of cash receipts journal for unusual items.