Substantive tests for cash balances

Investigate credit balances to determine if they represent actual bank overdrafts. Recalculate inventory valuation under the full absorption costing method.

Surprise cash count. List each item in the fund showing the denominations of notes and coins 5. For this reason, it is usually efficient for auditors to verify account balances by performing tests on individual transactions. Compare account balances with the preceding year or years.

During the tests of details of transactions, the auditor traces bank transfers and performs cash cutoff tests. Verify the cash balance used in the bank reconciliation: a.

Substantive procedures for revenue

When testing cutoff of cash receipts and disbursements at the reporting date, auditor may: 1. Reconcile physical inventory amounts with perpetual records. Window dressing is any deliberate misstatement of the assets, liabilities, equity, income and expenses. Control all cash funds, including marketable securities and other negotiable assets to prevent any transfers or substitution of floats to hide discrepancies, until the completion of the count. Presentation and Disclosure [1]. Negative form — requests debtor to respond when they disagree with amount shown. The test of controls for payroll were previously discussed in chapter 9. Usually accomplished by a. Cash deposits and disbursements recorded on the bank statement, but not on the accounting records 3. Major transactions involving inventory: increase to inventory when goods purchased and decrease to inventory when goods sold. Related Income Statement Effects [1].

Obtain supporting documents for any book and bank reconciling items 4. The risk associated with each assertion is assessed, and audit procedures related to specific assertions are undertaken which are aimed to reduce the risk of material misstatement for a specific assertion to an acceptable level.

types of substantive test

Verify the propriety of inventory flow. Accuracy: relates to determining the appropriate recording of the dollar value and other information of transactions.

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Auditing Cash: The Why and How Guide