Audit Program Sample for Long Term Liabilities
CASH
Risks • Cash transactions may not be recorded accurately • Cash may not exist
Steps
1. Confirm selected bank accounts and special arrangements
Select bank accounts for confirmation in order to obtain a moderate to low level of assurance that the aforementioned audit objectives are achieved. Bank confirmations should be sent to all banking relationships to identify accounts not included in the general ledger.
Confirmation requests should be sent under our control and, second requests and, where warranted, third requests should be mailed when responses to confirmation requests have not been received within a reasonable time.
Consider sending a special inquiry letter to ascertain the existence of special arrangements or restrictions, for example, compensating balance arrangements, security arrangements, written guarantees.
2. Review confirmation replies
For confirmations returned:
a) agree account information and account balance to comparative summary; b) investigate all discrepancies reported or questions raised in review and determine whether any adjustments are necessary; and c) assess impact of special arrangements or restrictions identified and determine whether disclosure is appropriate.
3. Test accounts where there is no confirmation
In the unusual situation where we do not receive a bank confirmation and are willing to forego the receipt of the bank confirmation, consider performing the following procedures to obtain a high level of assurance that the aforementioned audit objectives are achieved:
a) obtain subsequent month bank statement, bank reconciliation and supporting documentation. Consider obtaining information directly from the bank; b) test the mathematical accuracy of the bank reconciliation; (accuracy) c) trace outstanding items listed on the bank reconciliation to the subsequent month 's bank statement and for those not traced, trace to the cash disbursements
Risks • Cash transactions may not be recorded accurately • Cash may not exist
Steps
1. Confirm selected bank accounts and special arrangements
Select bank accounts for confirmation in order to obtain a moderate to low level of assurance that the aforementioned audit objectives are achieved. Bank confirmations should be sent to all banking relationships to identify accounts not included in the general ledger.
Confirmation requests should be sent under our control and, second requests and, where warranted, third requests should be mailed when responses to confirmation requests have not been received within a reasonable time.
Consider sending a special inquiry letter to ascertain the existence of special arrangements or restrictions, for example, compensating balance arrangements, security arrangements, written guarantees.
2. Review confirmation replies
For confirmations returned:
a) agree account information and account balance to comparative summary; b) investigate all discrepancies reported or questions raised in review and determine whether any adjustments are necessary; and c) assess impact of special arrangements or restrictions identified and determine whether disclosure is appropriate.
3. Test accounts where there is no confirmation
In the unusual situation where we do not receive a bank confirmation and are willing to forego the receipt of the bank confirmation, consider performing the following procedures to obtain a high level of assurance that the aforementioned audit objectives are achieved:
a) obtain subsequent month bank statement, bank reconciliation and supporting documentation. Consider obtaining information directly from the bank; b) test the mathematical accuracy of the bank reconciliation; (accuracy) c) trace outstanding items listed on the bank reconciliation to the subsequent month 's bank statement and for those not traced, trace to the cash disbursements