The audit program for cash contains a statement of the audit objectives, the complete and detailed procedures, and a conclusion. It is adapted from PPC, a division of Thompson Publishing.
The audit objectives are
a. Cash exists and is owned by the client
b. Cash balances reflect a proper cutoff of receipts and disbursements
c. Cash balances as presented in the balance sheet properly reflect all cash and cash items on hand, in transit, or on deposit with third parties
d. Cash balances are properly classified in the financial statements, and any restrictions on the availability of funds are properly disclosed
1. Using the standard AICPA bank confirmation form, request confirmation as of the audit date for bank accounts selected. Also request confirmation of material cash in savings institutions, certificates of deposit, and compensating balances. Documents items selected for confirmation and retain returned confirmations. Mail second requests, if necessary.
2. Obtain copies of each account's bank reconciliation for the workpapers
a. Trace the bank balance on the reconciliation to the standard bank confirmation received from the bank
b. Trace the reconciled book balance to the general ledger, trial balance or lead schedule as applicable
The solution presents a detailed audit program for cash and cash equivalents. It consists of multiple steps with good direction as to how to proceed, as adapted from Thompson Publishing.