Which audit test would provide the strongest evidence about the internal control in which the bank reconciliation is performed? Group of answer choices Confirm the cash balance with the bank directly. Inspect the last twelve months of bank reconciliation documents. Reperform the bank reconciliation Observe the client performing the bank reconciliation.
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You are testing the controls over bank accounts for your audit client, Louisiana Liquidators. You note that the responsibility for bank reconciliations has changed due to a corporate reorganization halfway through the current fiscal year. Both the staff member performing the bank reconciliations and the supervisor have changed. You are able to talk only to the current staff member and supervisor because the prior staff members took a voluntary severance package and left the client's employment three months ago. What procedures are available for you to gather evidence about the bank reconciliations? Explain how you would use each procedure and comment on the quality of the evidence obtained from each.
Akash M.
You are testing the controls over bank accounts for your audit client, Orleans Ltd. You note that the responsibility for bank reconciliations has changed due to a corporate reorganization halfway through the current financial year. Both the staff member performing the bank reconciliations and the supervisor have changed. You are able to talk to only the current staff member and supervisor because the other staff took voluntary redundancies and left the client’s employment six months ago. Required: (a) What techniques are available to you to gather evidence about the bank reconciliations? Explain how you would use each technique and comment on the quality of the evidence obtained from each (b) When you ask the employees responsible for bank reconciliations about how they perform the reconciliations there is a possibility that they will not tell the whole truth about their performance of the reconciliations. Given this, will you bother to ask them? Explain (c) Explain the impact of the staff changes on your controls testing program
Bank Reconciliation In-Class Team Case. You received the client prepared bank reconciliation presented below and are auditing Simply Soups Inc’s cash; control risk over cash is assessed at the maximum level. For each item select the one or more procedures she could perform to gather evidence in support of it. Note that since many of the procedures are redundant with one another, they would not all necessarily be included in one particular audit program. For purposes of this problem you may assume the following: Information provided by the bank is correct. The client has only this one bank account. The bank issues credit memos (which increase cash) and debit memos (which decrease cash) for transactions other than ordinary deposits and disbursements. Of the reconciling items, only Check # 517 was not returned with the cutoff statement (the others items cleared in a reasonable period of time). Bank Reconciliation American NorthWest Bank (relates to Simply Soups, Inc.) Milwaukee December 31, 20X2 1 (select 3 procedures) Balance per bank $121,987.17 2 (select 4 procedures Deposits in transit 12/30 12/31 $121,200.00 31,600.23 152,800.23 3 (select 4 procedures) Outstanding checks 517 2455 2456 2457 2458 2459 2460 $78,212.30 7,911.15 200.00 23.54 42,345.35 2,375.23 600.00 (131,667.57) 4 (select 4 procedures) Error: Check 2444 for $2,300 was erroneously charged by bank for $3,200 on 12/23/X2; $900 credit received on 1/4/X3 900.00 5 (select 1 procedure) Balance per books $144.019.83 Procedures Trace to cash receipts journal. Trace to cash disbursements journal. Compare to 12/31/X2 general ledger. Confirm directly with bank on standard form Determine item and amount are on 12/31/X2 bank statement. Compare to 1/10/X3 cutoff statement. Use cutoff statement to determine that no relevant items have been omitted from bank reconciliation. Inspect bank issued credit memo. Inspect bank issued debit memo. Inspect bank issued deposit receipt.
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Principles of Accounting Volume 1: Financial Accounting
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