CASH AND BANK BALANCES PROCEDURES RESULTS

To determine whether:

A. The cash and bank balances represent all cash that are
owned and on hand, in transit to or from financial
institutions, or in financial institutions or held in
custody by others for the account of the entity, and are
properly recorded.
B. The cash and bank balances are properly described
and classified, and adequate disclosures (including
amounts restricted, committed or pledged) with
respect to these amounts have been made.

SUBSTANTIVE PROCEDURES
1. Overall Analytical Review
1.1 Compare the balance of each significant cash and cash
equivalent account with the comparable balance for
the preceding period. Investigate significant or
unusual fluctuations.
1.2 Trace the opening balances from last year’s working
paper file and initial them.
1.3 Compare the ratio of available cash to cash invested
with the comparable ratio for the preceding period.
Investigate significant or unusual fluctuations.
1.4 Relate changes in working capital and in debt
balances to changes in cash balances and compare
cash balances to seasonal fluctuations in the entity’s
business.

2. Circularization
2.1 Have the client prepare "Standard Bank
Confirmation" forms (Scope/Sample: __________)
and confirmations of investments. (Scope/Sample:
__________.)
2.2 Control mailing of first request. Retain copies.
2.3 Obtain representation from client for opening and
closing of bank accounts and confirm it, from the
bank and cross refer it with the general representation
letter list of bank accounts provided.
2.4 Obtain confirmations/certifications duly addressed to
us and preferably directly provided to us with regard
to cash balances held by employees etc., on behalf of
the Company not physically counted by us.

3. Bank Balances
3.1 Prepare summary of all bank balances and deposits on
standard schedule.
3.2 Obtain a copy of bank reconciliations/prepare using
short form/long form bank reconciliation format
(Scope/Sample: __________ ) and check clerical
accuracy.
3.3 Trace balances on the reconciliations to the bank
confirmations and to the lead schedule or trial
balance.
 3.4 Obtain a list of outstanding cheques (Scope/Sample:
__________). Foot each list and compare the total to
the bank reconciliation. Test completeness of list
through upstream and downstream comparison of
__________ checks with the post-year end bank
statement. Review list and bank statement for large or
unusual items and follow-up as deemed necessary.
3.5 Review the reconciliations and investigate any large
or unusual items. Test reconciling items greater than
Rs. __________.
3.6 Investigate other reconciling items (e.g., bank errors,
deposit corrections, bank charges, returned cheques,
etc.) for each account included in the summary,
maturity of those outstanding for long periods.
3.7 Verify significant items by reference to the cutoff or
subsequent bank statements and supporting critical
forms and documents ( ). Scope/Sample: (
)
3.8 Obtain an explanation for other reconciling items that
have not cleared the bank in the subsequent period.
3.9 If the reconciliation is performed as of the balance
sheet date, propose adjustments for reconciling items
that cleared the bank before the reconciliation date but
are recorded on the books at a subsequent date (bank
charges etc).

4. Cash Payments
4.1 Obtain management’s authorization regarding
maximum limit of payment through Petty Cash
Voucher.
4.2 Review (Scope/Sample:_________) Petty Cash
Vouchers to check whether all petty cash payments
are within limits prescribed by the management.
4.3 Obtain management’s authorization regarding
maximum limit of each individual to sign check.
4.4 Review (Scope/Sample:__________) cheque counter
foil to ensure that the cheques are signed by
individuals authorized by the management in this
behalf and their initials are present on cheque counter
foils.
5. Scanning of Cash Book and Bank Statement

5.1 Scan cash book (Scope/Sample:________) to identify

unusual entries.
5.2 Scan bank statement (Scope/Sample:______) to
identify unusual entries.
5.3 Have the client prepare a list of interbank and
intrabank transfers for ( ) days before and after
the reconciliation date. Scope/Sample:( ).
5.4 Determine whether any interbank or intrabank
transfers noted in testing bank reconciliations and
reviewing the cash records have been included in the
listing.
5.5 Compare listed amounts with the appropriate bank
reconciliations and determine whether transfers as of
the reconciliation date were properly accounted for as
outstanding cheques and deposits in transit.
Scope/Sample:( ).
 5.6 Consider matching cash book and bank statement for
a month for selected accounts, if the risk status of
client is “High”.
5.7 Scan bank statements to identify any payments made
through “Cash” or “Bearer Cheques”. Investigate each
significant item and check postings in cash book. If
such instances are frequent cover in ML/Covering
letter to the board /Report, as appropriate.

6. Physical observation of cash

6.1 Determine if any yearend observations/ counts of
cash, cheques held is required. Observe cash count
and use cash and security count checklists. Note last
documents.
6.2 Perform surprise cash count subsequently and
document the exceptions, if any.

7. Cash in Transit
7.1 Obtain details of any cash/cheques in transit and
consider any extra-ordinary item.
7.2 Verify subsequent clearance in the bank statements.
7.3 Particularly review any subsequent reversal in the
cash in transit account and consider its reversal as of
the balance sheet date.
7.4 Review deposit slips to ensure that these were actually
deposited as of the balance sheet date before year end.

8. Other Tests
8.1 Obtain bank reconciliations where applicable and
compare balance per books with balance per books
shown in reconciliaiton.
8.2 Review confirmations received from banks for
accuracy with books for all balances and with balance
shown in bank reconciliation and bank statements
(where applicable).
8.3 Ensure that there are no unrecorded differences.