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HEP 456 Module 5 Section 12 and 13 Planning for Analysis and Interpretation and Gantt chartĀ
HEP 456 Module 5 Section 12 and 13 Planning for Analysis and Interpretation and Gantt chartĀ Name HEP 456: ā¦
Week 3 Assignment: Test of Controls over Cash Receipts
Name
ACC 614: Auditing & Fraud Detection
5th Dec 2022
Week 3 Assignment: Test of Controls over Cash Receipts
Examination of CashĀHandling Procedures and Controls. The Gutzler Company has asked you, as their designated auditor, to review their financial records from the fiscal year ending December 31. After consulting with Gutzler’s controller in late October, you filled out an internal management questionnaire and drafted the necessary memos detailing the company’s accounting practices. Here are some of your thoughts about money coming in:
- Forget about having to go via the postal department to get your cash receiptsĶ¾ they’ll be sent straight to the receivables clerk. The cash receipts journal is maintained by the accounts receivable clerkĶ¾ the bank deposit slip is prepared in duplicateĶ¾ entries are made from the bank deposit slip to a subsidiary accounts receivable ledgerĶ¾ and the deposit is mailed to the bankĶ¾ the validated deposit slips are received directly (unopened) by the controller. Furthermore, she gets the monthly financial statements straight (unopened) from of the bank and swiftly reconciles it.
- The cash receipts journal totals for the month are sent to the general journal clerk by journal voucher by the accounts receivable clerk.
- The ledger accounts clerk posts the monthly total of cash receipts journal debits to the cash account in the general ledger. On occasion, the accounting records clerk will also need to debit the ledger accounts cash account for items other than cash receipts journal entries, such as bank loan repayments. Certain general auditing processes have previously been carried out on the cash receipts audit:
- Postings from of the cash receipt journal have been followed all the way to the general ledger, and all the columns in the journal of cash receipts have been totaled and crosstotaled.
- Cash receipts journal entries have been linked to remittance advices and associated communications.
Required:
Regarding Gutzlerās internal control over accounts receivable and the standard audit procedures previously done, identify all further internal audits that should be undertaken to gather adequate relevant audit evidence about controls over cash and describe the rationale for each method. Do not disclose the processes for payments made and cash balances. Also, do not describe the degree toward which any of these treatments are to be undertaken. Assume that suitable controls exist to guarantee that all cash sales are documented. Organize your exam paper as follows:
| Other Audit Procedure | Reason for Other Audit Procedures |
|---|---|
| In order to validate and compare the company’s assets and debtors' assets, an audit verification system must be set up. | To avoid any confusion about who owes what, it’s best to set up a structure like this from the start. Each and every exchange has been accurately recorded by both sides. If everything checks up, there won’t be any problems getting the money into a bank once you’ve been paid for your services. |
| By assigning unique codes to each debit and account receivable in the ledger, it would be much easier to track down a specific transaction and confirm the correctness of the associated funds. | A verification system, based on the ledger codes, will be in place to ensure the accuracy and legitimacy of all cash transactions. |
| Someone other than the person making the entries in the general ledger should keep and maintain the records attesting to the deposit. | This will ensure the safety of the business, the employee, and the client by proving that all money transfers were recorded accurately. |
| All cash transactions need to be verified by the accounts receivable clerk. To ensure that all cash transactions are deposited at the bank on the same day the cash transaction took place. | This method of daily depositing receipts into a bank account prevents any misplacement of cash. |
References Louwers, T., Ramsay, R., Sinason, D., Strawser, J., Thibodeau, J. (2015). Auditing & assurance services (6th Ed.). New York: McGraw Hill Education.
