audit procedures, bank and cash

Question 1

What are the main risks of bank and cash balances being misstated?

Answer 1

Not all bank balances are disclosed by the client

Unreconciled differences in the bank reconciliation

Material cash balances are omitted or misstated

Liabilities (loans) are not stated correctly.

Question 2

What are common sources of information for auditing bank and cash balances?

Answer 2

Bank correspondence/statements
Client’s bank reconciliation
Physical cash balances
Client cash counts performed.

Question 3

How does the auditor verify the Valuation of bank balances?

Answer 3

Agree reconciling items in the bank reconciliation to the post year-end bank statements and pre year-end bank ledger account.

Question 4

What is the audit procedure for verifying Rights and Obligations for bank balances?

Answer 4

Confirm bank balances directly with the bank.

Question 5

How does the auditor confirm the Existence of cash balances?

Answer 5

Count material cash balances held by the client.
Confirm bank balances directly with the bank.