Explore BrainMass
Share

This addresses tests of acquisitions and cash disbursements

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Evaluate the following statement by an auditor concerning tests of acquisitions and cash disbursements:

In selecting the acquisitions and cash disbursements sample for testing, the best approach is to select a random month and test every transaction for the period. Using this approach enables me to thoroughly understand internal controls because I have examined everything that happened during the period. As a part of the monthly test, I also test the beginning and ending bank reconciliations. At the completion of these tests I feel I can evaluate the effectiveness of internal control.

© BrainMass Inc. brainmass.com October 17, 2018, 4:42 am ad1c9bdddf
https://brainmass.com/business/mergers-and-acquisitions/this-addresses-tests-of-acquisitions-and-cash-disbursements-474781

Solution Preview

Testing every single transaction defeats the purpose of random testing. It is too time-consuming and not realistic on an actual audit to test every transaction. The auditor will take into account the account being tested and then determines a population, which never includes every single transaction in the test. The population is then tested in the ...

Solution Summary

The solution explains the following comment:

In selecting the acquisitions and cash disbursements sample for testing, the best approach is to select a random month and test every transaction for the period. Using this approach enables me to thoroughly understand internal controls because I have examined everything that happened during the period. As a part of the monthly test, I also test the beginning and ending bank reconciliations. At the completion of these tests I feel I can evaluate the effectiveness of internal control.

$2.19
Similar Posting

Read the cash fraud schemes segment on p 697 in the attachment. Why are these the most common types of cash fraud schemes? Why are these the most common and what might be done to reduce their frequency?

See attached file.

Read the cash fraud schemes segment on p 697 in the attachment. Why are these the most common types of cash fraud schemes? Why are these the most common and what might be done to reduce their frequency?

View Full Posting Details