CHAPTER 1 Audit of Cash and

Cash Equivalent
ROMULO M. DAILEG, CPA
2022
AUDIT PROGRAM FOR CASH
To Determine that:
 Cash balances at the end of the reporting period
represent cash and cash on hand, in transit to or in
depositary bank
 Cash transaction are properly recorded
 Cash balances are properly described and classified
and adequate disclosures with respect to amounts
restricted as to withdrawals are made in the financial
statements.
ASSERTIONS

 Existence or Occurrence
 Completeness
 Rights and Obligations
 Valuation and Allocation
 Presentation and Disclosures
AUDIT OBJECTIVES
 Existence or occurrence

 To determine whether cash exist at year end

and cash related transaction

To determine that all cash balances of the

client are reflected on the balance sheet at
year end.
AUDIT PROCEDURES
 Obtain analysis of cash balances and reconcile to the
general ledger
 Confirm bank balances as of balance sheet date.
 Conduct cash count of undeposited collection, petty
cash and other funds.
 Confirm bank balance by direct correspondence with
all banks in which the client has had deposit in which
the client has had deposit and loans during the year
AUDIT PROCEDURES

 Obtain or prepare bank reconciliation

 Obtain cutoff bank statement showing the client
transaction with the bank at least one week after the
reporting date
 Obtain a list of interbank transfer of funds a few days
before the reporting date
 Test reasonableness of cut off by
 Inspect saving account passbook and certificate of
deposit
AUDIT PROCEDURES

 Determine any restriction on availability of cash

 Determine propriety of financial statement
AUDIT OBJECTIVES
 COMPLETENESS

To determine whether all cash transaction are

recorded in the proper accounting period
AUDIT PROCEDURE

 Obtain a cut-off bank statement containing

transactions several days subsequent to the balance
sheet date
 Prepare proof of cash and reconcile cash transaction
occurring during a specified period as they are
recorded by the bank and the client.
 Verify the client cutoff of cash receipts and cash
disbursement
AUDIT OBJECTIVES
 RIGHTS AND OBLIGATIONS

To determine that cash balances are available

for use without restriction or if with restriction
properly indicated in the balance sheet.
AUDIT PROCEDURES

 Review bank statements and bank replies to

confirmation letters
AUDIT OBJECTIVES

 VALUATION AND ALLOCATION

To determine that cash balances are available for

use without restriction or if with restriction
properly indicated in the balance sheet.
AUDIT PROCEDURES

 Verify existence of cash in bank under receivership,

cash in foreign bank or in foreign currency
AUDIT OBJECTIVE

 Presentation and Disclosures

To determine whether cash is presented in

accordance with GAAP.
AUDIT PROCEDURES

 Investigate any checks representing large or unusual

payment to related parties
 Evaluate proper financial statement presentation and
disclosure of cash