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Complete 2 page APA formatted essay: Writing assignment of auditing.In my opinion, I think it is appropriate that the cash balances are confirmed under the U.S. Auditing standards. This is mainly beca
Complete 2 page APA formatted essay: Writing assignment of auditing.
In my opinion, I think it is appropriate that the cash balances are confirmed under the U.S. Auditing standards. This is mainly because cash amounts are the most liquid part of the business and can easily be stolen from the firm or misrepresented (Kieso 77). Moreover, it could be termed as a control measure to ensure that no cash is lost between the time of recoding and auditing. It may also be trick especially because businesses are in operations whereby the cash balance is expected to vary with business activities.
The procedure for cash balances auditing may be a bit different as compared to other forms of audits yet so closely related. The first step is to identify the main purpose of the cash audit. which in this case is to ensure that the balances indicated in the cashbook correspond to the cash balances. This is to ensure than no cash is lost between the time of recording on the balance sheet and the time of auditing the records. The second step is taking into consideration the relevant developments for the cash account. Such developments could be as a result of sales or expenditure among other things. Finally the audit process is conducted to ensure that the balance is consistent. Finally, bank reconciliation may or may not be made.
The cash account is one that is under constant risks. To start with, being the most liquid asset, cash can easily be stolen from the company by either the workers or the management. Moreover, it is more likely to be misrepresented due to the fact that it is constantly changing. When controlling cash related risks, caution is taken to avoid confusion with the bank account. More often than not, some transactions are conducted using both accounts and often recorded as one. Additionally, proper planning must be taken into consideration to avoid any risks that might occur in the process (Kieso 77). These risks can be classified into the fraud triangle which has
