Professional Documents
Culture Documents
Completeness
Tests of transactions
[1]. Obtain bank cutoff statement and determine
Tests of details of account balances
propriety of year-end outstanding checks and
Analytical procedures
deposits-in-transit.
In testing transactions, the auditor is concerned
[2]. Examine or prepare year-end bank
with tests of:
reconciliation.
Omitted transactions and account
understatement (tracing source
documents to the books of entry) [3]. Prepare a proof of cash.
Invalid or unsupported transactions and
account overstatement (tracing [4]. Perform analytical procedures.
recorded transactions to source
documents). D. Existence or Occurrence (See Valuation or
Allocation)
Substantive Tests of Cash
E. Rights and Obligations
A. Presentation and Disclosure
[1]. Read or review the financial statements to [1]. Read minutes of the board of directors’
verify proper classification. meetings.
[2]. Read or review the financial statements to [2]. Determine existence of compensating
verify disclosures such as those relating to balances, levies, etc.
compensation balances.
[3]. Verify names on accounts through
[3]. Determine the conformity with GAAP. confirmation requests
B. Valuation or Allocation
Substantive Procedures for Cash
[1]. Simultaneously count cash on hand and 1. Confirm cash balances
negotiable securities.
2. Vouch reconciling items to the subsequent
[2]. Confirm directly with the bank:
month’s bank statement
Account balances
Direct liabilities to bank
Contingent liabilities to bank 3. Ask if all bank accounts are included on the
Letters of credit general ledger
Security agreements under the Uniform
Commercial Code
Authorized signatures 4. Inspect final deposits and disbursements for
[3]. Count petty cash fund and reconcile with
proper cutoff
vouchers.