Bank and Cash

Question 1

What are the key assertions?

Answer 1

• Existence
• Valuation

Question 2

What are the sources of evidence?

Answer 2

• Bank Reconciliation
• Cash Book
• Bank Statement
• Bank Confirmation Letter

Question 3

What can you do with the bank reconciliation letter?

Answer 3

• Cast to ensure arithmetical accuracy.
• Agree the balance per the cash book on the reconciliation to the year-end cash book and financial statements to confirm accuracy & valuation.
• Agree the balance per the bank statement to an original year-end bank statement and also to the bank confirmation letter to confirm accuracy & valuation.
• Trace all of the outstanding lodgements and unpresented cheques to the pre year-end cash book, post year-end bank statement to confirm accuracy, valuation & existence.

Question 4

What can you do with the cash book?

Answer 4

• Review the cash books and bank statements for any unusual items or large transfers around the year-end, as this could be evidence of window dressing. This verifies completeness & existence.