Question

1- Identify 4 of the 6 tests an auditor uses on the bank reconciliation?

( Accounting Auditing)

Answer 1

Solution:-

Test the mathematical accuracy of the bank reconciliation working paper and agree the adjusted balance per the books to the general ledger.
A third test is a test for kiting. Kiting is the process of covering a cash shortage by transferring money from one bank account to another and recording the transactions improperly on the entity's books. A test for kiting is completed through the use of an intertransfer schedule that lists all the transfers made between cash accounts. Each transfer is followed through from one account to another, noting the dates recorded on the entity's book and the dates on the bank statements.
A second test is a proof of cash. A proof of cash reconciles the cash receipts and disbursements recorded on the entity's books with the cash deposited into and disbursed from the entity's bank account for a specific time period. Its primary purpose is to ensure that all cash receipts recorded in the entity's cash receipts journal were deposited in the entity's bank account, to ensure that all cash disbursements recorded in thecash disbursements journal have cleared the bank account, and to ensure that no bank transactions have been omitted from the entity's accounting records. It can detect cash stolen after being recorded on the entity's books.