Project Cash

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Cash

Required:

1. Describe the internal control procedures (strengths) in the system of controls


over cash receipts. For each strength, describe a test of controls you could
perform to test the operating effectiveness of the strength.

2. For each weakness you discover in the controls related to cash receipts, list the
weakness, a potential error or irregularity, and a compensating substantive test
of transactions or balances that could detect the error or irregularity, assuming
the necessary records and documents are available to you.

3. Describe the internal control procedures (strengths) related to cash


disbursements and cash balances. For each strength, describe a test of controls
you could perform to test the operating effectiveness of the control.

4. For each weakness you find in the controls related to cash disbursements and
balances, list the weakness, a potential error or irregularity, and a
compensating substantive test of transaction that could detect the error or
irregularity, assuming the necessary records and documents are available to
you.

5. Prepare a substantive audit program to test the year-end cash balances. Your
audit program should address the financial statement assertions, as well as any
weaknesses you have uncovered in the internal control structure.

Additional questions for Groups with more than 4 members:

6. Discuss the following:


(i) reasons why auditors obtain a cut-off bank statement when auditing a
bank account;
(ii) three fraud –related audit procedures for cash.

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