Internal Audit Department
Audit Program for Cash
Audit Scope:
Audit Objectives:
Risks
• Cash transactions may not be recorded accurately
• Cash may not exist
Audit Procedures Done by Date W/P Ref
1. Confirm selected bank accounts and special
arrangements
Select bank accounts for confirmation in order to
obtain a moderate to low level of assurance that the
aforementioned audit objectives are achieved. Bank
confirmations should be sent to all banking
relationships to identify accounts not included in the
general ledger.
Confirmation requests should be sent under our
control and, second requests and, where warranted,
third requests should be mailed when responses to
confirmation requests have not been received within a
reasonable time.
Consider sending a special inquiry letter to ascertain
the existence of special arrangements or restrictions,
for example, compensating balance arrangements,
security arrangements, written guarantees.
2. Review confirmation replies
For confirmations returned:
a) agree account information and account balance to
comparative summary;
b) investigate all discrepancies reported or questions
raised in review and determine whether any
adjustments are necessary; and
c) assess impact of special arrangements or
restrictions identified and determine whether
disclosure is appropriate.
3. Test accounts where there is no confirmation
In the unusual situation where we do not receive a
bank confirmation and are willing to forego the receipt
of the bank confirmation, consider performing the
following procedures to obtain a high level of
assurance that the aforementioned audit objectives
are achieved:
a) obtain subsequent month bank statement, bank
reconciliation and supporting documentation.
Consider obtaining information directly from the bank;
b) test the mathematical accuracy of the bank
reconciliation; (accuracy)
c) trace outstanding items listed on the bank
reconciliation to the subsequent month's bank
statement and for those not traced, trace to the cash
disbursements records for the period prior to the
balance sheet date; (accuracy and
existence/occurrence)
d) trace deposits in transit listed on the bank
reconciliation to the subsequent month's bank
statement and for those not traced, trace to the cash
receipts records for the period prior to the balance
sheet date; (accuracy and existence/occurrence)
e) obtain explanation for large, unusual reconciling
items and trace to supporting documentation and/or
entries in the cash records, as appropriate; (accuracy
and existence/occurrence)
f) review the date the above items cleared the bank or
were recorded in the client's books to ensure
appropriate recording period. Trace to supporting
documentation as necessary; and (cut-off)
g) investigate items such as, long outstanding items,
dishonoured checks and significant adjustments in the
subsequent month, and record adjustments as
necessary. (accuracy and existence/occurrence)
4. Test bank reconciliations
Test bank reconciliation in order to obtain a moderate
to low level of assurance that the aforementioned
audit objectives are achieved by performing the
following:
a)test the mathematical accuracy of the reconciliation;
(accuracy)
b) trace book balances on the client's bank
reconciliation to the comparative summary; (accuracy)
c) trace bank balances on the client's bank
reconciliation to the bank statement; (accuracy)
d) test reconciling items on the bank reconciliation by
performing the following:
i) obtain subsequent month bank statement and
supporting documentation. Consider obtaining
information directly from the bank;
ii) trace outstanding items listed on the bank
reconciliation to the subsequent month's bank
statement and for those not traced, trace to the
cash disbursements records for the period prior
to the balance sheet date; (accuracy and
existence/occurrence)
iii) trace deposits in transit listed on the bank
reconciliation to the subsequent month's bank
statement and for those not traced, trace to
the cash receipts records for the period prior to
the balance sheet date; (accuracy and
existence/occurrence)
iv) obtain explanation for large, unusual
reconciling items and trace to supporting
documentation and/or entries in the cash
records, as appropriate; (accuracy and
existence/occurrence)
v) review the date the above items cleared the
bank or were recorded in the client's books to
ensure appropriate recording period. Trace to
supporting documentation as necessary; and
(cut-off)
vi) investigate items such as, long outstanding
items, dishonored checks and significant
adjustments in the subsequent month, and
record adjustments as necessary (accuracy
and existence/occurrence).
e) review client's bank reconciliation for review and
approval by appropriate management and timely
completion of reconciliation.
(Signature of Manager or Supervisor)
