audit
CHAPTER 20
Audit of Cash
Balances
Copyright 2003 Pearson Education Canada Inc.
20 - 1
What are the auditor’s primary concerns with regard to cash?
Copyright 2003 Pearson Education Canada Inc.
20 - 2
What are the auditor’s primary concerns with regard to cash?
- existence
Copyright 2003 Pearson Education Canada Inc.
20 - 3
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
Copyright 2003 Pearson Education Canada Inc.
20 - 4
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
- physical control
Copyright 2003 Pearson Education Canada Inc.
20 - 5
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
- physical control
- presentation and disclosure Copyright 2003 Pearson Education Canada Inc.
20 - 6
Cash Audit Procedures perform analytical procedures to test the reasonableness of cash balances Copyright 2003 Pearson Education Canada Inc.
20 - 7
Cash Audit Procedures
Enquire of management regarding any cash requirements or restrictions from debt agreements.
Copyright 2003 Pearson Education Canada Inc.
20 - 8
What is kiting?
Copyright 2003 Pearson Education Canada Inc.
20 - 9
What is kiting?
Kiting is an irregularity whereby an overstatement of cash is created by a cash transfer between bank accounts.
Copyright 2003 Pearson Education Canada Inc.
20 - 10
What is kiting?
Kiting is an irregularity whereby an overstatement of cash is created by a cash transfer between bank accounts.
The deposit is recorded in cash receipts but the disbursement is not recorded in cash disbursements.
Copyright 2003 Pearson Education Canada Inc.
20 - 11
Kiting example
On 12/31, Ace’s bookkeeper writes a $5,000 cheque on the National Bank and deposits the cheque in the Canadian Bank account.
National
Ace Co.
Ace Co.
12/31
Audit of Cash
Balances
Copyright 2003 Pearson Education Canada Inc.
20 - 1
What are the auditor’s primary concerns with regard to cash?
Copyright 2003 Pearson Education Canada Inc.
20 - 2
What are the auditor’s primary concerns with regard to cash?
- existence
Copyright 2003 Pearson Education Canada Inc.
20 - 3
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
Copyright 2003 Pearson Education Canada Inc.
20 - 4
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
- physical control
Copyright 2003 Pearson Education Canada Inc.
20 - 5
What are the auditor’s primary concerns with regard to cash?
- existence
- completeness
- physical control
- presentation and disclosure Copyright 2003 Pearson Education Canada Inc.
20 - 6
Cash Audit Procedures perform analytical procedures to test the reasonableness of cash balances Copyright 2003 Pearson Education Canada Inc.
20 - 7
Cash Audit Procedures
Enquire of management regarding any cash requirements or restrictions from debt agreements.
Copyright 2003 Pearson Education Canada Inc.
20 - 8
What is kiting?
Copyright 2003 Pearson Education Canada Inc.
20 - 9
What is kiting?
Kiting is an irregularity whereby an overstatement of cash is created by a cash transfer between bank accounts.
Copyright 2003 Pearson Education Canada Inc.
20 - 10
What is kiting?
Kiting is an irregularity whereby an overstatement of cash is created by a cash transfer between bank accounts.
The deposit is recorded in cash receipts but the disbursement is not recorded in cash disbursements.
Copyright 2003 Pearson Education Canada Inc.
20 - 11
Kiting example
On 12/31, Ace’s bookkeeper writes a $5,000 cheque on the National Bank and deposits the cheque in the Canadian Bank account.
National
Ace Co.
Ace Co.
12/31