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Robbins Network Services (RNS) involved in direct sales and installations of computing systems. In addition, the organization also provides consultation services for its clients and sells hardware and software essential for networking. Currently, the company is owned by five people and stakeholders who are not directly involved in daily running.
Using your analysis of the business environment of RNS from Milestone One, as well as your textbook reading on planning an audit of cash accounts, write an audit program (plan) that could be used to evaluate RNS’s internal controls for
. Be sure your program addresses each component of internal control.
this is topic you need to consider with reference and examples
Audit Program control Environment
For the audit of cash or any audit for that matter, I first recommend a walkthrough to understand the process and how do they ensure the completeness and accuracy of cash balances and transactions. As part of the walkthrough, one should do a test of one. Have the auditee walk you through the process using a real sample.
For example: take 1 or 2 bank accounts and have them explain the controls they have to ensure good internal controls over cash. Ask them to bring bank statements, account reconciliations, etc. to the walkthrough. See each rubric section for additional feedback and items to consider.
Before the walkthrough I would have them send you documented Policies and Procedures for Account Recs and the companies Treasury Policies.
Risk Assessment of Cash
Make sure these items are considered:
- Materiality to the balance sheet. Even if cash is overall immaterial to the total assets, Fraud controls should be assessed. Fraud has no threshold.
- What Segregation of duties do they have? For Account Recs, is there a separate preparer and reviewer? If not, there should be. For those who participate in recording of cash transactions, they should be ones to reconcile cash.
- How often do they perform access reviews on cash accounts and who are the authorized signers for an account to add new users to an account?
These are the diverse cash control activities that can be performed to ensure compliance with GAAP and to detect Fraud. Here is a good summary list you can use for future reference when you are doing real audits:
- Proof of cash
- Test the accounting records and reconciliations by reperformance.
- Compare the details of a sample of cash receipts listings to the cash receipts journal, accounts receivable postings, and authenticated deposit slips.
- Compare the details of a sample of recorded disbursements in the cash payments journal to account payable postings, purchase orders, receiving reports, invoices, and paid checks.
- Obtain analyses of cash balances and reconcile them to the general ledger.
- Confirm cash balances with financial institutions.
- Identify and investigate unusual cash receipts and disbursements.
- Verify the client’s cutoff of cash receipts and cash disbursements.
- Analyze bank transfers for the last week of the audit year and the first week of the following year.
- Investigate payments to related parties.
- Evaluate proper financial statement presentation and disclosure of cash
Timely communication is key to the function of any audit. Significant deficiencies and material weaknesses are to be reported as they are discovered during the course of the audit, less than significant deficiencies will be immediately addressed by the auditor and reported to management when it is deemed prudent to be disclosed in the interests of efficiency. SOX provides a formal vehicle to report these items including ensuring controls are being performed and remediation takes. Also, external auditors perform quarterly reviews which help alert management on trends prior to the year-end audit.
Use continuing auditing and analytics. Management should implement a program to assess more real time. If there is a problem with cash one wants to find out sooner versus later.
The paper was easy to read, well organized and adequate references cited for your research.
add extra things in the audit of cash (your own research)!!!