Essay on Cash Audit

Essay on Cash Audit

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The audit objectives to be achieved for the audit of cash substantiate the following assertions: existence, completeness, rights and obligations, valuation, and presentation and disclosure.
One of the objectives for a cash audit is to verify that the recorded cash balances exist at the balance sheet date and reflect all cash and cash items on hand, in transit, and on deposit with third parties. This objective validates both the existence assertion and part of the completeness assertion. Another objective is to make sure that the recorded cash balances include all of the cash transactions that have occurred along with the effects from those transactions; this would satisfy the remaining component of the completeness assertion. A third objective is to confirm that the entity has legal title to all cash balances shown on the balance sheet at the balance sheet date. This objective validates the rights and obligations assertion. A fourth objective is to verify that the recorded cash balances are realizable at the amounts stated on the balance sheet and those amounts match supporting schedules; this would satisfy the valuation assertion. A fifth objective is to make certain that cash balances are properly identified and classified in the balance sheet and that all lines of credit, loan guarantees, and other restrictions on cash balances are appropriately disclosed. This objective substantiates the presentation and disclosure assertion. The following sections outline a list of possible audit procedures that aid in achieving the objectives mentioned.
The auditors should begin verifying cash balances by performing a few initial procedures on cash balances and records. They should trace the current period's opening balances...

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...ndependent source. In doing this, they can secure a high degree of proficient, corroborating information about the validity of the year-end bank reconciliation. This also provides additional evidence to the existence, completeness, rights and obligations, and valuation assertions for cash.
Cash should be accurately identified and classified in the financial statements. The auditors determine the correctness of the financial statement presentation from the evidence obtained from the previously mentioned audit procedures. The auditors should inquire about any evidence of restrictions on the availability of funds and make sure those restrictions are properly disclosed. In addition, the auditors should compare financial statement presentation with the applicable accounting standards. These procedures provide evidence to the presentation and disclosure assertion.

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