ACC311 - Fundamentals of Auditing GDB Last Date Monday, July 29, 2019

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GDB (ACC311)

Fundamental of Auditing

Covering Lecture 23-31

Topic for Discussion: “Testing the Cash System”

Learning Objectives:

• To assess the knowledge related to verification approaches during audit
• To understand the process of testing the cash system
• To know the importance of cash transactions in the business
• To asses and understand areas where control procedures over cash transactions should be applied

Scenario:

Cash is the most liquid yet highly un-secured asset of any business for which a strict internal control system is always desirable. The control over cash is the prime concern of every business entity. It is the type of asset, which is most likely to disappear, if not handled carefully. Zee Ltd. – an agricultural based manufacturing concern, located in the heart of XYZ village, is seeking the audit services for the matters where cash transactions are involved. You have been assigned the task to audit the cash system of Zee Ltd. to identify areas where control procedures over cash matters are required to apply.

Important Instructions:

• Carefully review your GDB before submission as it cannot be replaced once it is submitted.
• Your discussion must be based on logical aspects of the topic requirements with proper justification.
• Use the font style “Times New Roman” and font size “12”.
• Your answer should be relevant to the topic i.e. clear and concise and in bulleted style preferably.
• Word limit for GDB is 150.
• Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
• Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
• You should post your answer on the Graded Discussion Board (GDB), not on the Moderated Discussion Board (MDB). Both will run parallel to each other during the time specified above. Therefore, due care will be needed.
• Obnoxious or ignoble answer should be strictly avoided.
• You cannot participate in the discussion after the due date via email.
• Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.
• For planning your semester activities in an organized manner, you are advised to view schedule of upcoming Assignments, Quizzes and GDBs in the overview tab of the course website on VULMS.
• As you know that load shedding problem is also prevailing in our country. Keeping in view the fact, you are advised to submit your GDB well before time without waiting for the due date. For your convenience; you have been communicated so that you can manage your activities, therefore no excuse will be entertained after due date of GDB.

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 Verification approaches during audit

Verification means 'Proving the truth' or 'Confirmation'. Confirmation is a reviewing procedure wherein inspector fulfill himself with the real presence of benefits and liabilities showing up in the Statement of Financial position.

Testing the cash system

The essential review methodology utilized in testing cash balances is confirmation. So as to test affirmation, evaluators request that the organization's investors check the parity of the bank accounts legitimately; reactions are sent exclusively to the auditors.

Cash transactions in the business

"A cash transaction is where transaction is settled right away" Then again, installment for a credit transaction is settled sometime in the not too distant future. Make an effort not to consider cash and credit exchanges as far as how they were paid, yet rather, when they were paid.

Control procedures over cash transactions

Internal control procedures for the receipt of cash help your small business prevent loss due to employee fraud and accounting errors. These controls are planned to confine access to cash to determined employees and check that all receipts, discounts or moves are recorded accurately and in a convenient way.

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GDB Solution:

Verification approaches during audit

Verification means 'Proving the truth' or 'Confirmation'. Confirmation is a reviewing procedure wherein inspector fulfill himself with the real presence of benefits and liabilities showing up in the Statement of Financial position.

Testing the cash system

The essential review methodology utilized in testing cash balances is confirmation. So as to test affirmation, evaluates request that the organization's investors check the parity of the bank accounts legitimately; reactions are sent exclusively to the auditors.

Cash transactions in the business

"A cash transaction is where transaction is settled right away" Then again, installment for a credit transaction is settled sometime in the not too distant future. Make an effort not to consider cash and credit exchanges as far as how they were paid, yet rather, when they were paid.

Control procedures over cash transactions

Internal control procedures for the receipt of cash help your small business prevent loss due to employee fraud and accounting errors. These controls are planned to confine access to cash to determined employees and check that all receipts, discounts or moves are recorded accurately and in a convenient way.