The main goals of this chapter are to: Understand the relationship of the various business processes to cash, know the different types of bank accounts, know tests of details of transactions used to audit cash, be able to explain tests of details of account balances used to audit cash,. | Chapter 16 Auditing the Financing/Investing Process: Cash and Investments McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Cash and the Effect of Major Accounting Transactions/Business Processes LO# 1 16- Types of Bank Accounts In order to optimize its cash flow, an entity implements procedures for accelerating the collection of cash receipts and delaying the payment of cash disbursements, to the extent delay is appropriate. General Cash Account Imprest Cash Accounts Branch Accounts Types of Bank Accounts LO# 2 16- Substantive Analytical Procedures—Cash This limited applicability of substantive analytical procedures is normally offset by (1) extensive tests of controls and/or substantive tests of transactions for cash receipts and disbursements or (2) extensive tests of the entity’s bank reconciliations. Because of the residual nature of the cash account, the auditor’s use of substantive analytical procedures for auditing cash is limited to . . . comparisons with prior years’ cash balances. comparisons with budgeted amounts. LO# 3&4 16- Substantive Tests of Details of Transactions and Balances LO# 3&4 16- Balance-Related Assertions LO# 3&4 16- Auditing the General Cash Account Copy of Bank Reconciliation Standard Bank Confirmation Cutoff Bank Statement To audit a cash account, the auditor should obtain these items. LO# 5 16- Fraud-Related Audit Procedures Extended Bank Reconciliation Procedures Proof of Cash Tests for Kiting LO# 6 16- Disclosure Issues for Cash LO# 6 16- Auditing Investments Common Stock Preferred Stock Debt Securities Hybrid Securities LO# 7 16- Control Risk Assessment—Investments Occurrence and Authorization Completeness Accuracy and Classification Here are some of the more important assertions for investments. LO# 8 16- Segregation of Duties LO# 9 16- Substantive Procedures for Testing Investments LO# 10 16- Advanced Module: Auditing Fair Value | Chapter 16 Auditing the Financing/Investing Process: Cash and Investments McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Cash and the Effect of Major Accounting Transactions/Business Processes LO# 1 16- Types of Bank Accounts In order to optimize its cash flow, an entity implements procedures for accelerating the collection of cash receipts and delaying the payment of cash disbursements, to the extent delay is appropriate. General Cash Account Imprest Cash Accounts Branch Accounts Types of Bank Accounts LO# 2 16- Substantive Analytical Procedures—Cash This limited applicability of substantive analytical procedures is normally offset by (1) extensive tests of controls and/or substantive tests of transactions for cash receipts and disbursements or (2) extensive tests of the entity’s bank reconciliations. Because of the residual nature of the cash account, the auditor’s use of substantive analytical procedures for auditing cash is .
