AUDIT OF CASH AND

FINANCIAL INSTRUMENTS

©2018
©2018 FAKULTAS
FAKULTAS EKONOMI
EKONOMI &
& BISNIS
BISNIS UNIVERSITAS
UNIVERSITAS PADJADJARAN
PADJADJARAN 23 - 1
 Nature of cash balances

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 2

 Cash Balances
 Cash in Bank
• Checking accounts
• Payroll accounts, etc

 Cash on Hand
• Petty cash
• Undeposited collections

 Cash Equivalents
• Time deposits (< 3 months)

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 3

 Relationship of General Cash to
Other Cash Accounts

Branch Bank Imprest Payroll

Account Account

General
Cash

Cash Imprest Petty

Equivalents Cash Fund

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 Relationships of Cash in the Bank and
Transaction Cycles

Capital Acquisition And Repayment Cycle

Capital Stock – Common Dividends Payable

Redemption Issue of Payment of
of stock stock dividends

Paid-in Capital in Excess

of Par – Common Cash in Bank
Redemption Issue of
of stock stock

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 Relationships of Cash in the Bank and
Transaction Cycles

Acquisition and Payment Cycle

Accounts Payable
Payment

Cash in Bank

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 Relationships of Cash in the Bank and
Transaction Cycles

Sales and Collection Cycle

Accounts Receivable Cash Discounts Taken

Cash
receipts

Gross Sales Cash in Bank

Cash
sales

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 7

 Relationships of Cash in the Bank and
Transaction Cycles

Payroll and Personnel Cycle

Accrued Wages, Salaries, Accrued Payroll
Bonuses, and Commissions Tax Expense
Payment Payment

Withheld Income Taxes

and Other Deductions Cash in Bank
Payment

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 Scope of Audit of Cash
1. Tests of controls & tests of cash transactions :
Performed in the audits of transaction cycles :
Sales & collections - cash receipts
Acquisition & payment - cash disbursements
Payroll & personnel - cash disbursements
Capital acq. & repayment - cash receipts & cash payments

2. Tests of details of balances

• Audit of cash in bank - Tests of bank reconciliation
• Audit of cash on hand - Cash count

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 Materiality and Risk
Materiality
• Cash balances may not represent a material part of current
assets or total assets, but the volume of cash transactions
includes a significant dollar amount.

Risk
• Cash is an inherently risky asset because of the volume of
activity and liquidity
• IR is high for existence & completeness assertions.
• IR is low for rights, valuation, presentation & disclosure

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 10

 Fraud Risk
Cash receipts:
• Inventory is sold but the employee does not record the sale
and steals the cash
• An employee receives a customer payment, steals the cash,
and write-off the accounts receivable as uncollectible
• Lapping

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 Fraud Risk
Cash payments:
• The employee purchase merchandise and records the sale
at an unauthorized discounted
• The employee steals the cash and conceals it by recording a
ficticious discount
• The employee writes a check to a fictitious vendor

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 12

 Control Risk

The reliability of cash balances depends on :

• Controls of transactions in the cycles
• Bank Reconciliation - monthly prepared by independent
person

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 13

 Pengaruh Materiality, IR & CR terhadap
Luas Pengujian (DR)
Sifat kas yang unik (IR) menyebabkan auditor cenderung
merancang prosedur2 auditnya dengan lebih terfokus pada
pendeteksian error & fraud sekalipun CRnya rendah.
• Fraud oriented
• Professional scepticism
• Use basis of 100%,

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 14

 Audit of cash in the bank balance

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 15

 Audit of Cash in the Bank Balance

Audit Objectives
• Existence
• Completeness
• Valuation : Accuracy, cut-off, detail tie-in
• Rights & classification are generally not concern

Metodologi for Audit of Cash

• Same as other balance accounts

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 Audit Procedures for Cash in the Bank Balance
1. Obtain bank reconciliation as of reporting date.
2. Obtain a cut-off bank statement
3. Send a bank confirmation
4. Test of bank reconcialiation

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 Audit Procedures for Cash in the Bank Balance
Test of bank reconciliation:
• Cocokkan saldo cash in bank menurut rekonsiliasi bank dengan
jawaban konfirmasi bank
• Catat nomor cek yang terakhir dikeluarkan sebelum tanggal
laporan (dilakukan ketika melakukan cut-off test transaksi
pengeluaran kas).
• Telusur cek2 yang ada dalam cut-off statement ke daftar
outstanding checks dalam rekonsiliasi bank dan ke jurnal
pengeluaran kas

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 18

 Audit Procedures for Cash in the Bank Balance
Pengujian rekonsiliasi bank :
• Investigasi outstanding checks yang belum dicairkan/tidak
tercantum dalam cutoff statement:
- telusur ke jurnal pengeluaran kas
- telusur ke cutoff bank statement.
• Telusur deposit in transit ke jurnal penerimaan kas dan cut-off
bank statement
• Telusur unsur2 rekonsiliasi bank lainnya (beban bank, jasa giro)
ke bank statement dan debit/kredit memo

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 19

 Konfirmasi Bank
• Form konfirmasi standar (Arens: Figure 23-4)
• Tujuan :
• Bukan hanya untuk mengecek kebenaran saldo
• Untuk memperoleh informasi lain: dana lain di bank, kredit
yang diperoleh, dll (completeness & disclosures).
• Memberikan bukti mengenai existence, rights & accuracy.
• Kontribusi untuk completeness, presentation & disclosures.
• Dikirim kepada semua bank dimana klien memiliki
accounts, termasuk yang bersaldo nihil.
• Diterima langsung oleh auditor dari bank ybs.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 20

 Cut-off Bank Statement

• Bank statement beberapa hari setelah tanggal laporan.

• Diterima langsung oleh auditor dari bank ybs.
• Manfaat untuk memverifikasi deposits in transit &
outstanding checks.

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 Fraud Oriented Procedures

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 22

 Prosedur Audit Untuk Mendeteksi Fraud –
Proof of Cash
• Digunakan jika IR x CR (RMM) tinggi, untuk menentukan :
• Semua penerimaan kas yang dicatat dalam jurnal penerimaan
kas telah disetorkan ke bank
• Semua setoran ke bank telah dicatat dalam catatan akuntansi
• Semua pengeluaran kas yang dicatat dalam jurnal
pengeluaran kas telah dibayar oleh bank
• Semua pembayaran oleh bank telah dicatat
• Proof of cash mencakup:
• Substantive tests of cash transactions
• Tests of details of cash balances
• Arens: Figure 23 - 6

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 Test of Kiting

• Kiting: mencatat transfer uang sebagai setoran di bank

penerima dan tidak mencatat pengurangannya pada akun
bank yang dananya ditarik.
• Tujuan : menutupi cash shortage

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 Test of Kiting
• Prosedur audit :
• Buat daftar transfer antar bank yg terjadi beberapa hari
sebelum dan sesudah tanggal laporan, telusur ke catatan
akuntansi untuk memastikan bahwa setiap transfer telah
dicatat sebagai penerimaan dan pengeluaran dalam periode
yang sama.
• Bandingkan informasi pengeluaran menurut daftar transfer ke
jurnal pengeluaran kas dan bank statement
• Bandingkan informasi penerimaan menurut daftar transfer ke
jurnal penerimaan kas dan bank statement.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 25

 Test of Lapping
• Lapping : Fraud yang mengakibatkan jumlah penerimaan kas tidak
sesuai dengan yang seharusnya.
• Dilakukan dengan cara mengambil penerimaan uang (dari piutang)
dan menunda pencatatannya.
• Lapping terjadi karena perangkapan fungsi penerimaan kas dan
pencatatan piutang.
• Contoh Lapping :
Peneriman Dokumen Jurnal Bukti Setor
Tunai 600 Tape 600 Penj. tunai 600 Tunai 400
Cek 200 ___ - . - Cek 200
800 600 600 600

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 Test of Lapping
Prosedur audit:
• Konfirmasi piutang dalam periode interim
• Lakukan penghitungan kas (undeposited collections) secara
mendadak dan awasi prosedur penyetorannya.
• Bandingkan copy bukti setor dengan :
- rician laporan harian penerimaan kas
- catatan setoran pada jurnal penerimaan kas
- posting (kredit) pada master file/kartu piutang

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 Design and perform audit tests
of imprest petty cash.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 28

 Petty Cash

Petty cash is a unique account because

it is often immaterial in amount, yet it is
verified on many audits.

The account is verified primarily because

of the potential for defalcation and the
client’s expectation of an audit even
when the amount is immaterial.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 29

 Audit of Imprest Petty Cash

1. Internal controls over petty cash

2. Audit tests for petty cash

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 30

 Petty Cash
Focus on controls of petty cash transactions.
• Diskusikan dengan kasir tentang prosedur pengelolaan dana
kas kecil (imprest or fluctuating)
• Uji transaksi2 reimbursement (sample) :
• periksa urutan nomor & otorisasi bukti kas kecil
• periksa kelengkapan & kelayakan dokumen pendukung
bukti kas kecil
• bandingkan jumlah reimbursement dengan total bukti2
kas kecilnya
• Lakukan cash count

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 31

 Types of Audit Tests Used for General Cash in Bank

Cash in Bank
Beginning balance
Cash receipts Cash disbursements

Audited by Audited by
TOC-T, STOT, and AP TOC-T, STOT, and AP

Ending balance

Audited by
TOC-B, AP, and TDB

TOC-T + TOC-B + STOT + AP + TDB

= Sufficient appropiate evidence per ISA
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 Audit of Financial Instruments
– Marketable Securities

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 33

 Audit of Marketable Securities

• Include a wide variety of securities that are classified as

HTM, trading & AFS securities.
• Important financial reporting & audit implications for the
classification (PSAK/IFRS) :
• HTM valued at amortized cost & subject to impairment
test
• Trading & AFS securities are carried at fair value.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 34

 Inherent and Fraud Risks

• Risk of sudden market declines, which would adversely

affect the valuation of securities;
• Management manipulation of the classification of
securities to achieve preferable valuation treatment, that
is, market value versus amortized cost;
• Management manipulation of the valuation of fair
market value if the securities are thinly traded.

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 35

 Control Risks
• Risk of theft of securities if they are not physically
controlled, or if authorization and monitoring over their
purchase or sale is not effective
• Lack of policies over purchase or sale of securities
• Lack of monitoring of changes in securities balances
• Lack of policies over valuation or classification of
securities
• Lack of segregation of duties between individuals
responsible for making investment decisions and those
responsible for the custody of securities
• Lack of involvement or oversight by internal audit in
relation to securities

©2018 FAKULTAS EKONOMI & BISNIS UNIVERSITAS PADJADJARAN 23 - 36

 Analytical Procedures
• Develop expectations about the level of amounts in
ending balances of marketable securities accounts
based on purchase or sales activity reported by
management during the year;
• Develop expectations about the relationship between the
balances in marketable securities accounts, the rates
anticipated to be earned on those accounts, and any
changes therein, and associated interest and dividend
revenues;
• Review changes in the balances, risk composition, and
classification types of marketable securities in relation to
stated investment policies and plans.

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 Tests of Controls
• Review policies for authorization to purchase, sell, and
manage marketable securities;
• Inquire of the board of directors about the board’s
oversight of the marketable securities process and
examine related documentation;
• Examine documentation of authorization for selected
purchases and sales of marketable securities during the
year;
• Review the minutes of the board meetings for reference
to investment policies and associated oversight;
• Examine evidence of authorization controls for changes
in classification of marketable securities;

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 Tests of Controls
• Inquire of management about its process for establishing
valuation of marketable securities and review related
documentation;
• Inquire of management about their process for
reclassifications and review related documentation;
• Examine documentation for selected marketable
securities transactions to determine whether segregation
of duties is maintained;
• Review reports of internal audit in relation to their
activities involving monitoring of marketable securities

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 Substantive Procedures
Existence/occurrence
• Request that the client prepare a schedule of all
marketable securities held by the company at year end.
• Verify the existence of securities by either (a) counting
and examining selected securities or (b) confirming the
existence with trustees holding them.
• Reconcile the amounts with the general ledger.
Completeness
• Foot the schedule of marketable securities and examine
the securities. Examine selected transactions and
brokers’ advices near year end to determine that the
transactions are recorded in the correct period.

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 Substantive Procedures
Rights
• Examine selected documents to determine if there are
any restrictions on the marketability of securities.
• Inquire of management as to existence of any
restrictions.
Valuation/allocation
• Determine current market value through reference to a
financial reporting service or a similar electronic source.
• Recompute interest and determine that accrued interest
is properly recorded at year end.

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 Substantive Procedures
Presentation and disclosure
• Determine management’s intent to hold securities and
review classification.
• Document that intention in a management representation
letter.
• Determine whether the securities are properly classified,
and that any restrictions on their use are appropriately
disclosed in the notes to the financial statements

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 END

©2018
©2018 FAKULTAS
FAKULTAS EKONOMI
EKONOMI &
& BISNIS
BISNIS UNIVERSITAS
UNIVERSITAS PADJADJARAN
PADJADJARAN 23 - 43