Cash and Bank a Practical Audit Tips

Cash and Bank balance stands as being an asset of the firm, and is one of the essential element of balance sheet. The main assertions we concerned are: valuation, existence, obligations and its right. Through the assertions listed, we are more focused on the overstatement of the asset.

Typically, the audit works involved, the ff:

Analytical Procedure
Knowing the changes of the cash balances, one would end up being able to gauge a general idea of what had occur during the year. For example, a purchase of machine could possibly incur a general layout ( assumption: ABC company paid by cash), a sales of the company's equity shares, etc.

As a starting ground, we want to know the income incurred during the year, adjusted with regard to noncash items, like: depreciation. After that, we start to taken in other cash influence transactions. In other words, analytical procedure provide you with a general idea about what is important to expect during the entire course of audit.

Cash Book Review

Obtaining a cash book transactions listing ( cash-in & cash-out), to check the nature of the transactions. The goal is to make sure that the cash transactions are within the regular course of business.

Obtaining bank confirmation
External evidence, in such a case, are more reliable than internally-generated sources. Send out a a bank confirmation to the specific banks to confirm the balance.

Bank Reconciliation Review
In some cases, the firm might have long outstanding reconciling items, that might signals the issues of blank cheque. For this reason, bank reconciliation review is needed you to be aware of these long reconciling items.

Petty Cash count
Restaurants, hotel might keep a huge amount of petty cash available. A petty cash countis crucial to ensure the correctness of the balances.