Investment Audit and Cash Balance

Nabila Aprilia Ade Mila Pratiwi Dinda Salma Nur Azizah

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Learning Objectives
We should be able to understand:
1. Investment cycle and cash balance.
2. Investment cycle control testing.
3. Substantive test of investment cycle i.e.
short-term investment and long-term
investment.
4. Cash balance testing control.
5. Substantive test of cash balance.
6. Working Paper Inspection.
 SAS no. 81: Auditing Investment

SAS no. 81 provides guidance to auditors

in auditing investments in securities, that
is, debt securities and equity securities.

Why we have to do a cash

balance audit?
 The Investment Cycle and Cash Balance
The Investment
Cycle
The investment cycle is a
cycle of investment
transactions, both
investments in fixed assets
and investments in securities.
Cash Balance
Included in the cash balance is:
1. Unpaid receipt
2. Cash in the bank in a
savings and checking
account
3. Petty cash and checking
salaries account
Control Testing of Investment Cycle
2. Documents and General
Notes

a. Stock
Certificate
e. Brokekr’s
Statement
b. Bond
Certificate
f. Book of
Original Entry
c. Bond
Indenture
g. Investment
Subsidiary
d. Broker’s
Ledger
Advice
Controls and Functions are
Relate
A. Authorization of Investment Transaction, B. Receipt and Surrender Securuties,
• Buying • Receipt and Surrender Securities
• Selling. • Receipt Periodic Profit.

C. Record Transaction, D. Complete Transacton,

• Record of buying, selling and • Receipt of Cash
profit • Disbursement of cash
• Record of Market Adjustments. • Assess Investment Performance
and Reporting.
Substantive testing of the investment
cycle short-term and long-term

1). Determine 3).Designing

2). Initial Procedure
detection risk subtantive testing

4). Analytical 5). Testing

Procedures trasactions details

6). Balance test 7). Comparison

details with GAAP
 Control Testing of Cash Balance
Control Activity:

1. Perfomance
Review

2. Information
Processing

3. Phisical Control

4. Segregation of
Duties
 Substantive testing of Cash
Balance
1. Determine Detection 2. Designing Substantive
3. Initial Procedures 4. Analytical Procedures
Risk Testing

5. Testing of Transaction 6. Testing of Balances 7. Presentation and

Details Details Disclosure

• Doing Cash Cutoff • Calculate Cash in Hand • Comparison

Tests • Confirmation of Cash • Doing Scanning, Review and Reporting of
• Search for Bank and Loan Balances at Prepare Reconciliation Bank Presentation with
Transfer the Bank • Get and Use Statement of GAAP
• Confirmation other Cutoff Bank
agreements with Bank
Working Paper Inspection

Working papers are written records of audit evidence or

information obtained during the audit and the
methods, procedures applied, tests performed and
conclusions made by the auditor.
Thank You For Attention
Any Questions?