audit procedures for cash
Audit Procedures for Cash
Every organization must have checks and balances to ensure transparency and accountability in financial matters. The cash audit is one such procedure that every business puts in place. Read through this article to learn more about it.
- Check the summary of the period-end cash balances to ensure that there are no loopholes. The total should match with the ledger total and the previous audit's working papers.
- Check the list of bank accounts in the summary and compare this list with that of the previous year, to check for new additions and omissions.
- Verify the organization's disbursements by checking the bank statements.
- Check how many people are involved in dealing with cash. Ideally, only employees with administrative powers and managers should be involved in this process. An auditor also needs to examine the outstanding checks, deposits, reconciling items, etc.
- Review the receipt books, and ascertain the reason for any receipts not reflecting in the bank statement. If there are multiple banks in question, check all the interbank transfers, and verify their authenticity.
- The expenditure book of an organization tells us where and how much of the cash was spent, so check that the sum total of all the expenses in the expenditure book is equal to the total of the expenses in the books of accounts.
- Carefully compare all the canceled checks, and also check the follow-up on these to ensure that these are not endorsed by their payees.
- Examine all the receipts of goods and services, and whether these were approved by the authorized personnel.