Activity 2 - Audit of Cash

Using the following categories, define the purpose of each of the common controls over cash
listed below. You may use more than one category for each control, if necessary.
NoCategories of Purposes of Each Common Control:
1. To prevent theft of cash
2. To ensure complete recording of cash
3. To prevent modification of the recording of cash
4. To detect inaccuracy of ending cash balance or misstatements therein
5. To ensure that all items are uniquely identified and that an adequate audit trail exist
for transactions
6. To serve as a deterrent for fraud

Common Controls Over Cash:

A. Segregation of duties: 1,3 & 6
B. Restrictive endorsements of customer checks. 2 & 6
C. Independent bank reconciliations by employees who do not handle cash. 4 & 6
D. Computerized control totals and edit tests. 3 & 5
E. Authorization of transactions. 1 & 6
F. Pre Numbered cash receipt documents and turnaround documents 2 & 5
G. Periodic internal audits. 6
H. Competent, well-trained employees. 2