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CONTRIBUTED ON June 5, 2002 BY: JOY CELESTE (jcembudo@splashcorp.

com) Customized Audit Work Program Audit Work Program Cash and Cash Equivalents Subsidiary/Department: Date: AUDIT OBJECTIVES: To determine whether: 1. The cash balances represent all cash and cash items on hand, in transit to or in financial institutions and are properly recorded. 2. The cash balances are properly described and classified and adequate disclosures are made of restricted or committed funds and of cash not subject to immediate withdrawal (e.g., time deposits and deposits in foreign countries subject to exchange controls, etc.). AUDIT PROCEDURES: Procedures
1) ANALYTICAL PROCEDURESGENERAL

WP Ref.

Done Y/N?

By

Date

Comments

a)

Compare the balance of each significant cash and cash equivalent account with the comparable balance for the preceding period. Investigate significant or unusual fluctuations.

b) Compare the ratio of available cash to cash invested with the comparable ratio for the preceding period. Investigate significant or unusual fluctuations. c) 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) REVIEW OF CASH MANAGEMENT SYSTEM a) Obtain an understanding of the client's cash management system and the business purposes of the practices involved. Document this information in a memorandum i) Obtain assurances from the appropriate level of management that the cash management activities have legitimate business purposes and are proper.

b) Throughout the performance of interim tests of cash and cash equivalents, be alert to potential indicators of "excessive overdrafting," "chaining" and other types of cash abuses. If potential indicators of abuses in the cash management system are noted, consider the following additional procedures: i) Request the client to obtain a written legal opinion of competent counsel as to the propriety of the practices in use.

ii) Confirm directly with the client's banks their knowledge of, and concurrence with, the company's cash management practices. 3) CONFIRMATION OF CASH BALANCES WITH THIRD

PARTIES a) Confirm bank balances of selected cash accounts as of the reconciliation test date, Confirm the following accounts: All general disbursing accounts Accounts with large balances. Scope:( ) A sample of other accounts. Scope:( ) Time deposits and certificates of deposit. Scope:( ) Significant accounts closed since the previous audit. (Specifically inquire whether there have been any transactions since closing and whether the bank has been notified of the closing of the account.) i) Request cutoff bank statements for the general disbursing accounts and selected accounts confirmed for( ) days after the reconciliation date (increase the cutoff period for any accounts the client reconciles by the "batch" method for outstanding checks). Scope:( )

ii) Prepare a confirmation control of the accounts circularized and cutoff bank statements requested. b) If cutoff bank statements are not received directly from the banks, consider the need to determine the authenticity of the statements received by the client. If it is considered necessary, perform the following: i) Review the cancellation dates on checks, debit and credit memos, etc., to determine whether they apply to the period covered by the cutoff statement and whether there have been any substitutions.

ii) Foot (a) canceled checks and debit memos and (b) deposits and credit memos to determine whether all supporting items are included with the statement. Balance the statement, using the totals so determined. iii) Review the bank statement for possible alterations or erasures. c) Return cutoff bank statements, together with canceled checks and other enclosures, to the client employee who normally receives such statements from the bank. Obtain a signed receipt, written in ink, for inclusion in the working papers.

d) Cross-reference other information confirmed in conjunction with the cash accounts (e.g., liabilities and contingencies) to the applicable sections of the working papers. 4) TESTS OF BANK RECONCILIATIONS a) Have the client prepare a summary of the bank reconciliations for all cash accounts with significant balances and all cash accounts with a high volume of

transactions. Verify the clerical accuracy of the summary and perform the following: Reconciliation date: ( ) Scope: ( ) i) Trace the "bank balance" for each account included in the summary to the related confirmation and to the cutoff or subsequent bank statement. Investigate any differences.

ii) Trace the "book balance" for each account included in the summary to the general ledger or a subsidiary bank ledger. (1) If the individual account balances are reflected in a subsidiary bank ledger, have the client reconcile the subsidiary ledger to the control accounts. Investigate significant or unusual reconciling items. iii) Compare the totals of significant reconciling items (e.g., deposits in transit and outstanding checks) with comparable totals for the preceding period. Investigate significant or unusual fluctuations. iv) Have the client prepare a list of deposits in transit for each account included in the summary that has total deposits in transit in excess of ( ). Foot each list and compare the total with the reconciliation summary. (1) Verify significant deposits in transit by tracing the amounts to the cutoff or subsequent bank statement. Investigate any unusual delays in the credit of such amounts by the bank and explain in the working papers. Scope: ( ) (2) Obtain directly from the bank authenticated duplicate deposit slips covering in-transit deposits, requesting that the bank compare the detail on the copy of the deposit slip submitted with the detail on the bank's copy. Trace the detail thereon to the cash receipts journal or register, item for item. Scope: ( ) (3) If the bank cannot or will not compare the detail on the copy of the deposit slip submitted with the detail on the bank's copy, consider requesting access to the bank's files or requesting photocopies of the bank's copies of the deposit slip, so the audit team can make the comparison. v) Have the client prepare a list of outstanding checks for each account included in the summary that has total outstanding checks in excess of ( ). Foot each list and compare the total with the reconciliation summary. (1) Scan each list for unusual amounts (e.g., round amounts, repetitive amounts, unreasonably

large amounts, etc.). List any such items for further investigation. (2) Scan through the canceled checks returned with the cutoff or subsequent bank statement for unusual payees (e.g., checks made out to employees, related parties, cash, etc.). List any such items for further investigation. (3) Trace selected canceled checks returned with the cutoff or subsequent bank statement and dated before the reconciliation date to the list of outstanding checks. Compare the number, date, payee and amount of each check with the check register or similar record. Scope: ( ) (4) Compare the number, date, payee and amount of selected outstanding checks not clearing with the cutoff or subsequent bank statement and dated before the reconciliation date with the check register or similar record. Scope: ( ) (5) Review selected canceled checks returned with the cutoff or subsequent bank statement and dated after the reconciliation date. Determine that the dates of the first bank endorsements did not precede the reconciliation date. Scope: ( ) (6) Account for all checks issued during the month ending in the reconciliation date in excess of ( ) as having been voided, having cleared the bank (by comparing paid checks with check register entries) or being outstanding. vi) Investigate other reconciling items (e.g., bank errors, deposit corrections, bank charges, returned checks, etc.) for each account included in the summary. (1) Verify significant items by reference to the cutoff or subsequent bank statements and supporting critical forms and documents ( ). Scope: ( ) (2) Obtain an explanation for other reconciling items that have not cleared the bank in the subsequent period. (3) 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. 5) TESTS OF TRANSFERS a) INTERBANK AND INTRABANK

Have the client prepare a list of interbank and intrabank transfers for ( ) days before and after the reconciliation date. Scope:( )

i)

Determine whether any interbank or intrabank transfers noted in testing bank reconciliations and reviewing the cash records have been included in the listing.

ii) Compare listed amounts with the appropriate bank reconciliations and determine whether transfers as of the reconciliation date were properly accounted for as outstanding checks and deposits in transit. Scope:( )
6) COUNTS OF CASH ON HAND (TO BE COORDINATED WITH THE COUNT OF MARKETABLE OR OTHER NEGOTIABLE SECURITIES.)

a)

Count material amounts of undeposited cash receipts and cash working funds held by individuals or departments that participate in the processing of the receipts (and other material cash funds) as of the balance sheet date. Record the details of the items counted and include such documentation in the working papers. Scope:( ) i) Ensure that the custodian or other authorized management representative is present at all times during the count and obtain signed receipts, written in ink, from client personnel for the return of all cash handled by representatives of the Firm. Retain the receipts in the working papers.

ii) Control undeposited cash receipts to the depository. Determine whether the deposit appears as an intransit item on the bank reconciliation of the proper account and that it was accepted by the depository without material subsequent adjustment. b) Confirm material cash funds held by employees or other custodians as of the balance sheet date. Scope:( )
7) 8) ANSWER INTERNAL CONTROL QUESTIONNAIRES (ICQ A-1, A-2 and A-3) SUPERVISION, REVIEW AND CONCLUSIONS

a) Conclude responsive to the audit objectives. b) Prepare points regarding internal controls and other business matters. c) Perform senior review and supervision. d) Clear senior review points. e) Clear manager review points.

PERFORMED BY:

REVIEWED BY:

Audit Assistant

Audit Supervisor