A Proof of Cash Is Not an Effective Procedure for Identifying
A proof of cash is not an effective procedure for identifying which of the following types of misstatements?
A) All recorded disbursements were paid by the bank.
B) All recorded cash receipts were deposited.
C) All amounts that were paid by the bank were recorded.
D) Some checks were written for incorrect amounts.
Listing all bank transfers made a few days before and after the balance sheet date and tracing each to the accounting records for proper recording is a useful approach to test for:
C) income smoothing.
D) channel stuffing.
On the last day of the fiscal year,the cash disbursements clerk drew a company check on bank A and deposited the check in the company account in bank B to cover a previous theft of cash.The disbursement has not been recorded.The auditor will best detect this form of kiting by:
A) examining the composition of deposits in both bank A and bank B subsequent to year-end.
B) examining paid checks returned with the bank statement of the next account period after year-end.
C) preparing, from the cash disbursements records, a summary of bank transfers for one week prior to and subsequent to year-end.
D) comparing the detail of cash receipts as shown by the client's cash receipts records with the detail on the confirmed duplicate deposit tickets for three days prior to and subsequent to year-end.
When the auditor believes the year-end bank reconciliation may be intentionally misstated,it is appropriate to perform extended tests of the year-end bank reconciliation.Assuming the client has a October 31 year-end,these extended tests would not include:
A) comparing all September 30 reconciling items with canceled checks and other documents in the October bank statement.
B) comparing all canceled checks and deposit slips in the October bank statement with the October cash disbursements and receipts records.
C) carrying out all proper procedures subsequent to the end of the year with the use of the bank cutoff statement.
D) determining that all outstanding checks had cleared by the date of the bank cutoff statement.