ENGLISH

(1) [FENDY] Cash is an exchange tool and also used as a measure in accounting (Baridwan).
According to PSAK 2 cash consists of cash balances (cash on hand) and current accounts. Cash
accounts are one component in the financial statements, of course it is necessary to conduct an audit
to ensure that the reports presented are in accordance with procedures to match their objectives based
on PSAK 1. The first thing to do is to make an agreement between the auditor and the company
through an engagement letter and an independence statement from the auditor in accordance with the
objectives stated in SA 200, to increase confidence in the financial statements.
(2) Before conducting a substantive test the auditor must design an audit program for testing
controls in accordance with SA 300. Evaluation of internal control is done by focusing on cash or
bank accounts. To conduct an evaluation in accordance with SA 315, the auditor can conduct a
question and answer session with the client using ICQ (Internal Control Questionnaries) to prove
whether internal control is good or not. In accordance with SA 265, the auditor must report to the
relevant committee if deficiencies in internal control are found.

Soal: Why does the fraud detection in a detailed testing of cash balance is considered more important
than other balance sheet accounts? Could you give me two specific examples that show how this
emphasis the effects to evidences that the auditor has collected of the audit of cash on the end of the
year.
Jawaban: A detailed testing of cash is more preferred because in audit of cash, auditor must
differentiate between verifying reconciliation of bank statement balances by clients with the balance
in the ledger, and also verify that records of the cash in ledger reflect correctly every cash
transactions that occur throughout the year. The examples are, there might be any misstatements of
payment transaction, and also it might cause errors or misstatement when receiving cash.