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(SAPP) AA Revision - Substantive Procedures Bank Cash

The document outlines a revision audit procedure focusing on substantive procedures for bank cash verification. It details specific activities for auditors, such as obtaining bank confirmation letters, reconciling balances, and reviewing unusual transactions. The guidance emphasizes ensuring the accuracy and completeness of bank balances and disclosures in financial statements.

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12 views2 pages

(SAPP) AA Revision - Substantive Procedures Bank Cash

The document outlines a revision audit procedure focusing on substantive procedures for bank cash verification. It details specific activities for auditors, such as obtaining bank confirmation letters, reconciling balances, and reviewing unusual transactions. The guidance emphasizes ensuring the accuracy and completeness of bank balances and disclosures in financial statements.

Uploaded by

Con Tác Giả
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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REVISION AUDIT PROCEDURE THEORY

Marks will be allocated:


• 0.5 marks to activity performed by auditor (correct action verb and correct audit evidence)
• 0.5 marks to objective of activity

Section Substantive procedures Guidance

Bank cash • Obtain a bank confirmation letter from the bank for all its accounts to confirm
amounts and transactions.
• Agree all balances listed on the bank confirmation letter to the company’s bank
reconciliations or the trial balance/general ledger in order to ensure
completeness of bank balances.
• For the current account, cast the company’s bank reconciliation to check the
additions in order to ensure arithmetical accuracy.
• Agree the balance per the bank reconciliation to an original year-end bank
statement and to the bank confirmation letter to confirm its accuracy.
• Trace all the outstanding lodgements to the pre year-end cash book, post year-
end bank statement and also to the paying-in book pre year end to ensure that
they were recorded accurately.
• Trace all unpresented cheques through to a pre year-end cash book and post
year-end bank statement to ensure that they were recorded accurately. Discuss
with management and obtain explanations from management to investigate any
unusual amounts or significant delays.
• Examine any old unpresented cheques to assess whether they need to be written
back.
• Review the cash book and bank statements for any unusual items or large
transfers around the year end, as this could be evidence of window dressing.
• Examine the bank confirmation letter for details of any security provided by the
company, with regards to the bank overdraft or any legal right of set-off as these
may require disclosure.
• For the savings accounts, review any reconciling items on the year-end bank
reconciliations and agree to supporting documentation to confirm its existence.
• Review the financial statements to ensure that the disclosure of bank balances is
complete and accurate, and that the overdraft is within current liabilities and the
savings accounts within current assets.

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