Scribd Logo
Upload

Welcome to Scribd!

  • 41 views

    04-Substantive Testing of Cash

    Uploaded by

    Joshua Solayao
    The document outlines procedures for substantively testing cash, including counting cash, confirming bank balances, reconciling bank statements, examining interbank transfers, and determining restrictions or presentation issues. Key steps include obtaining signatures for cash counted, tracing items to bank deposits or payrolls, confirming reconciling items, examining cutoff bank statements, and vouching supporting documents for transfers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    04-Substantive Testing of Cash

    Uploaded by

    Joshua Solayao
    41 views4 pages
    The document outlines procedures for substantively testing cash, including counting cash, confirming bank balances, reconciling bank statements, examining interbank transfers, and determining restrictions or presentation issues. Key steps include obtaining signatures for cash counted, tracing items to bank deposits or payrolls, confirming reconciling items, examining cutoff bank statements, and vouching supporting documents for transfers.

    Original Description:

    Substantive tests for Cash

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document outlines procedures for substantively testing cash, including counting cash, confirming bank balances, reconciling bank statements, examining interbank transfers, and determining restrictions or presentation issues. Key steps include obtaining signatures for cash counted, tracing items to bank deposits or payrolls, confirming reconciling items, examining cutoff bank statements, and vouching supporting documents for transfers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    41 views4 pages

    04-Substantive Testing of Cash

    Uploaded by

    Joshua Solayao
    The document outlines procedures for substantively testing cash, including counting cash, confirming bank balances, reconciling bank statements, examining interbank transfers, and determining restrictions or presentation issues. Key steps include obtaining signatures for cash counted, tracing items to bank deposits or payrolls, confirming reconciling items, examining cutoff bank statements, and vouching supporting documents for transfers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Substantive Testing of Cash

    1. Cash count
     undeposited collections, petty cash and other funds
    o Obtain custodian’s signature to acknowledge return of items counted.
    o Reconcile items counted with general ledger balances
    o Trance undeposited collection counted to bank reconciliation.
    o Follow up disposition of items in cash counted:
     Undeposited collections should be traced to bank deposits
     Checks accommodated to petty cash should be deposited after
    the count to establish their validity.
     IOUs in the petty cash should be confirmed and traced to
    collections in the next payroll period.
     Expense vouchers should be traced to the succeeding
    replenishment voucher.
    o Coordinate cash account with count of marketable securities and other
    negotiable assets of the client.
    o Obtain confirmation of year-end fund balances of cash not counted in
    branches of other offices.
    2. Bank Balance
     Confirm by direct correspondence with all banks which the client has had
    deposits and loans during the year.

    3. Bank Reconciliation
     Check arithmetical accuracy of reconciliation.
     Trace Balance per book to the general ledger balance of cash account.
     Trace balance per bank statement and compare with amount confirmed by bank.
     Establish authenticity of reconciling items by reference to their respective
    sources, like:
    o Bank debit or credit advices
    o Duly approved journal vouchers.
     Investigate check outstanding for long period of time
    o Consider adjustment, especially if the check is already stale.
    o Consider the possibility of an erroneous preparation of the check.
     Investigate any unusual reconciling items.
     When internal control over cash is weak, consider preparing a proof of cash
    reconciliation.
    4. Bank Statement
     Obtain cutoff bank statement showing the client transactions with the bank at
    least one week after reporting date, and:
    o Trace year-end reconciling items, like
     Deposit of the year-end undeposited collections.
     Completeness of year-end outstanding checks.
     Correction of bank errors.
    o Examine supporting documents of year-ends outstanding checks that did
    not clear in the cutoff bank statements.

    5. Interbank Transfers
     Obtain interbank transfers of funds a few days before and after the reporting date
    o Vouch supporting documents
    o Ascertain that the related receipts and disbursements were booked by the
    client within the same day or at least within the same month.
     Test reasonableness of cutoff by:
    o Comparing dates of checks returned with cutoff bank statement to dates
    of recording in the cash disbursement register.
    o Tracing receipts recorded a few days before the reporting date to bank
    deposits.
     Inspect savings account passbook and certificate of deposits
    o Reconcile with book balances
    o Update interest earned posting on passbooks, if necessary.
    o Compare balances with bank confirmation reply.
     Determine any restrictions on availability of cash
     Determine propriety of financial statement presentation and adequacy of
    disclosure.

    You might also like