Audit of Cash and Bank Balances
What are Cash and bank balances?
Cash and bank balances refer to the amount of money that a person or company has on hand in the form of physical cash, as well as the amount of money that is held in checking, savings, and other types of bank accounts. The term “cash and bank balances” is typically used on a company’s balance sheet to represent the amount of liquidity that the company has available to meet its financial obligations. This figure is important for both internal management purposes and for external stakeholders, such as investors, who want to know how much money the company has available to fund operations and pay dividends.
Procedures/Controls
- Segregation of duties relating to authorization of transactions, handling of cash/ issuance of cheques and writing of books of account, and rotation of the duties periodically;
- Proper authorization of cash and banking transactions;
- Daily recording of cash transactions;
- Safeguards such as, restrictive crossing of cheques, use of pre-printed, pre-numbered forms;
- Periodic reconciliation of bank balances;
- Reconciliation of cash-on-hand with book balance on a daily basis or at other appropriate intervals, including surprise checks by higher authorities,
- Safe custody of cash, cheque books, receipt books, etc; and security documents;
- Cash/ fidelity insurance
Audit of Cash and Bank Balances
To audit cash, the auditor would review the company’s cash records to ensure that they are accurate and complete. This would involve verifying that all cash receipts and disbursements have been recorded, that the amounts are accurate, and that the company has sufficient supporting documentation for the cash transactions. The auditor may also test a sample of the cash transactions to ensure that they have been properly classified and recorded in the company’s financial statements. Additionally, the auditor would review the company’s policies and procedures related to cash to ensure that they are in compliance with generally accepted accounting principles (GAAP) and the company’s internal policies.
Audit of Receivables
What are Receivables?
Receivables are amounts of money that are owed to a person or company by customers or clients for goods or services that have been provided. In other words, receivables are amounts that are expected to be paid in the future as a result of transactions that have already taken place. As a result, these amounts may be due in the short term (usually within 30 days) or in the long term (more than 30 days). Companies typically keep track of their receivables and other financial information using accounting software or other tools.
Audit of Receivables
An audit of receivables is an examination of a company’s accounts receivable to verify the accuracy and completeness of the information. This typically involves reviewing the company’s records and supporting documentation, such as invoices and receipts. Make certain that the amounts shown on the company’s financial statements are correct and complete. Additionally, the audit may also include testing a sample of transactions to ensure that they were recorded properly. This is to ensure that appropriate controls are in place to prevent errors and/or fraud. Hence, the purpose of an audit of receivables is to provide assurance that the company’s financial statements accurately reflect the amounts that are owed to it.
Procedures/ Controls
- Trace payable report
- Investigate reconciling items
- Test verification of invoices
- Match invoices to goods inward register
- Ascertainment of the number of accounts for verification
- Confirm accounts payable balance
- Review payment receipts
- Assess doubtful accounts
- Review credit/ debit notes
- Bill and hold purchase
- Purchase return
- Invoices and hold sales/ services/ revenue
- Sales/ services/ revenue return
- Related party payables
- Trend Analysis
- Segregation of Duties