Reference no: EM134050

Question :

a) Get a cutoff bank statement subsequent to the balance sheet date - gives assurance that the amount of cash shown on the balance sheet was not overstated by omission of one or more checks from the list of checks outstanding.

b) Compare paid checks returned with bank statement to list of outstanding checks in preceding reconciliation - by performing this comparison the auditors will be assured that cancelled check on the bank statement compared to the list of outstanding checks on the bank resolution are being maintained by the cutoff period and that nothing is being hidden on cash mismanagement.

c) Trace all bank transfers during the last week of the audit year and the first week of the subsequent year - This is known as kitting and tracing a short period before and after the fiscal year end may confirm that there are no checks being drawn from one bank to another and that all transactions are confirmed at legitimate transactions.

d) Investigate any checks shows large or unusual payments to related parties - This may elevate any fraud possibilities from board members or executives for large amounts of funds that are not tied to authorize transactions which would have to be properly documented and disclosed. Reviewing these large transactions and the documentation related with them will reveal any fraudulent activity in these high risk areas.