Question

Why would the audit work on cash be more extensive than might appear to be justified by the relative amount of the balance sheet figure for cash?

Answer 1

Audit work on cash be more extensive than might appear to be justified by the relative amount of the balance sheet figure for cash because:-

1. It is the source of all the transactions. Most of the expenses, revenues, assets, and liability have the cash effect. Therefore, it has been used at such an enormous scale that if we can check its properly, it can exhibit a lot about the irregularities in the books of the accounts.

2. It can easily be robbed by the staff with an ulterior motive. Hence, it is most prone to theft, misappropriation and embezzlement.

3, It is so liquid that it is very easy to use it if fraudsters can get hold of it.

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