1. Chapter 23
Audit of Cash Balances
Pages

2. Revenue & Collection Transaction cycle
credit sales accounts receivable x.xx sales x.xx
cash receipts cash x.xx accounts rec x.xx

3. significant classes of Transactions
“credit sales” accounts receivable x.xx sales x.xx
“cash receipts” cash x.xx accounts rec x.xx

4. Levi
What is an imprest payroll account ?

5. cash equivalents an original maturity date of less than 90 days
savings accounts – time deposits
certificates of deposit
money market funds

6. COSO components of internal controls
Control environment
Risk assessment
Control activities
Information and communication
Monitoring

7. Control Activities Control Activities Adequate separation of duties
Proper authorization of transactions and activities
Adequate documents and records
Physical control over assets and records
Independent checks on performance

8. Mackenzie
what responsibilities need to be separated to have adequate “segregation of duties” ?

9. Separation of Duties p 166
authorization of transactions from the custody of related assets
custody of assets from accounting
operational responsibility from record-keeping responsibility
IT duties from user departments

10. Separation of Duties authorization of transaction
custody of assets involved in transaction
Accounting (record-keeping) for the transaction
reconciliation of assets to accounting records

11. Separation of Duties p 320 Bank reconciliation by someone who does not
handle cash receipts custody of assets
record cash receipts accounting / record-keeping
approve check requests authorize transactions
Write checks custody of assets
record disbursements accounting / record-keeping

12. Adequate documents & records
Pre numbered checks

13. Priya
What is the objective of AU-C section 500?

14. AU-C 500 Audit Evidence
.04 The objective of the auditor is to design and perform audit procedures that enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion.

15. Garren
Describe a cutoff bank statement?

16. Jordan Describe a Bank Confirmation
What information is on a bank confirmation?

17. Peter
Who must request the bank to send a bank confirmation to the auditor ? Who must sign the request for the bank confirmation?

18. page 324

19. Algernon
what distinguishes fraud from errors ?

20. fraud
Intentional
Knowingly making material misrepresentations with the intent of inducing someone to believe the falsehood and act upon it and, thus suffer a loss or damage.

21. significant classes of Transactions
“credit sales” accounts receivable x.xx sales x.xx
“cash receipts” cash x.xx accounts rec x.xx

22. auditing account balances

23. auditing transaction cycles

24. proof of cash (page 329)

25. schedule of transfers
handout

26. Bank transfer schedule handout

27. transfer schedule (handout)
1st
Parent
writes check
2nd
check clears
Parent’s bank
Sub receives
check
4th
3rd
check clears
Sub’s bank

28. Meredith handout Does check 4100 result in a $50,000
overstatement OK understatement

29. 1st 2nd 3rd 4th check 4100 12/31 12/31 1/2 1/3 date in CD Jnl Parent
writes
check
2nd
date in
Sub’s
CR Jnl
3rd
date
check
cleared
Sub’s
bank
4th
date
check
cleared
Parent’s
bank
12/31
12/31
1/2
1/3

31. consolidated cash is correct

32. David deposit in transit on the Sub’s bank reconciliation
How would these items show up on the bank reconciliation?
outstanding check on the Parent’s bank reconciliation
deposit in transit on the Sub’s bank reconciliation

33. Jeanette handout Does check 4275 result in a $10,000
overstatement OK understatement

34. 1st 2nd 3rd 4th check 4275 12/31 1/2 1/2 1/4 date in CD Jnl Parent
writes
check
2nd
date in
Sub’s
CR Jnl
3rd
date
check
cleared
Sub’s
bank
4th
date
check
cleared
Parent’s
bank
12/31
1/2
1/2
1/4

36. consolidated cash understated by $10,000

37. Julia it would not appear on the Sub’s bank reconciliation
How would these items show up on the bank reconciliations?
outstanding check on the Parent’s bank reconciliation
it would not appear on the Sub’s bank reconciliation

38. Joseph handout Does check 4280 result in a $20,000
overstatement OK understatement

39. 1st 2nd 3rd 4th check 4280 1/2 12/31 12/31 1/2 date in CD Jnl Parent
writes
check
2nd
date in
Sub’s
CR Jnl
3rd
date
check
cleared
Sub’s
bank
4th
date
check
cleared
Parent’s
bank
1/2
12/31
12/31
1/2

41. consolidated cash overstated by $20,000

42. Melissa it would not appear on the Sub’s bank reconciliation
How would these items show up on the bank reconciliations?
it would not appear on the Parent’s bank reconciliation
it would not appear on the Sub’s bank reconciliation

43. 5 points if you get it correct -2 points if you get it wrong
handout
Does check B403 result in a $5,000
overstatement OK understatement

44. 1st 2nd 3rd 4th check B403 1/2 1/3 12/31 1/3 date in CD Jnl Parent
writes
check
2nd
date in
Sub’s
CR Jnl
3rd
date
check
cleared
Sub’s
bank
4th
date
check
cleared
Parent’s
bank
1/2
1/3
12/31
1/3

46. The subsidiary actually has $5,000 less in their checking account than they show in their G.L.
B403 is an attempt to conceal the shortage.
Depositing the $5,000 in the Sub’s bank account on 12/31/14 but not recording the deposit in the books until 1/2/15 would enable the Sub to reconcile their Bank Statement

47. Cash Receipts

48. Jo Ellen
If you are concerned about the occurrence assertion for cash receipts during the year
would you Vouch from CR Jnl to supporting evidence OR
Trace a sample of cash receipts from mailroom remittance list into CR Jnl

49. Pei For occurrence of cash receipts
Vouch from CR Jnl to supporting evidence
IF you find an entry in the CR Jnl for which there is no supporting evidence
Would Cash Receipts be over or under stated

50. would you Vouch from CR Jnl to supporting evidence OR
Emily
If you are concerned about the completeness assertion for cash receipts during the year
would you Vouch from CR Jnl to supporting evidence OR
Trace a sample of cash receipts from the mailroom remittance list into the CR Jnl

51. Cody
For completeness
Trace a sample of cash receipts from the mailroom remittance list into the CR Jnl
If you find evidence of a CR in the mailroom for which there was no entry in the CR Jnl
Would Cash Receipts be over or under stated

52. Cash Disbursements

53. cash disbursements at Year End
Bart
With regard to the occurrence of
cash disbursements at Year End
Would you
Vouch from the 2014 CD Jnl to the bank statement or
Trace a sample of checks on the 12/31/14 bank statement into the CD Jnl

54. Vouch from 2014 CD Jnl to the bank statement
John
With regard to the occurrence of cash disbursements
Vouch from 2014 CD Jnl to the bank statement
If you find an entry in the 2014 CD Jnl for which there is no evidence of an underlying check
Would Cash Disburse be over or under stated?

55. Jeff Vouch from 2014 CD Jnl to the bank statement
With regard to the occurrence of cash disbursements
Vouch from 2014 CD Jnl to the bank statement
If you find an entry in the 2014 CD Jnl for which there is no evidence of an underlying check
Would ”Cash” be over or under stated

56. Juancarlos With regard to the completeness of cash disbursements
Would you
Vouch from the 2014 CD Jnl to cancelled checks on the bank statement or
Trace a sample of checks from the 12/31/14 bank statement into the CD Jnl

57. Levi For completeness of cash disbursements
Trace a sample of checks from the 12/31/14 bank statement into the 2014 CD Jnl
If you are unable to trace a check that appears on the 12/31/14 bank statement into the 2014 CD Jnl
Would Cash Disburse be over or under stated

58. Mackenzie For completeness of cash disbursements
Trace a sample of checks into the CD Jnl
If you are unable to trace a check that appears on the bank statement into the CD Jnl
Would “Cash” be over or under stated

59. cut-off at 12/31/2014

60. Priya
cash receipts
are you going to audit the last 25 entries in the Cash Receipts Jnl prior to 12/31/14 or
the first 25 entries in the Cash Receipts Jnl after 1/1/15

61. Garren
cash receipts - will you
Vouch or Trace ?

62. Jordan
cash receipts
with which financial statement assertion are you concerned if we are auditing cash receipts at 12/31/14?

64. Peter
cash receipts
what evidence is provided if we audit the last 25 entries in the Cash Receipts Journal prior to 12/31/14?

65. Algernon cash disbursements
audit the last 25 checks in the Cash Disbursements Jnl prior to 12/31/14 or
the first 25 checks in the Cash Disbursements Jnl after 1/1/15

66. Meredith cash disbursements
with which financial statement assertion are we concerned if we are auditing cash disbursements at 12/31/14 ?

68. Jeanette You are concerned about cash being overstated
With regard to the of cash disbursements
You are auditing the first 25 entries in the January 2015 Cash Disbursements Journal will you
Vouch or Trace

69. Vouch from the CD Jnl to cancelled checks on the bank statement

70. David
If you vouch a check that appears in the CD Jnl into the 12/31/14 bank statement
Would Cash Disburse be over or under stated

71. Julia
If you vouch a check that appears in the CD Jnl into the 12/31/14 bank statement
Would “Cash” be over or under stated

72. Joseph
what evidence is provided if we audit the first 25 checks dated after 1/1/2015 ?