Question

1. Name 5 workplaces that are typically generated in the audit of CASH. What is a 'bank cut off settlement"? How is it used

2. What items should be included in the auditors required communication with the audit committee or similar group

3. What is the purpose of the client written representation letter? Describe its content

Answer 1

Ans 1) The 5 workplaces that are typically generated in the audit of CASH are as folows:

1) Financial Companies

2) Hotel Business

3) Educational Organisation like coaching classes

4) Banks all government, private and co operatives

5) Stock exchange

The Bank cut off settlement refers to the time taken to resolve all bank's transactions at the end of the day.The bank then sends its settlement file to a Federal Reserve Bank, which credits it with any funds due for inter bank settlements.

It is used by the bank to settle all its accounts payable and have sufficient liquid money for next day with the help of Reserve Bank.

Ans 2) The  items should be included in the auditors required communication with the audit committee or similar group are as follows:

1. The nature and extent of specialized skill or knowledge needed to perform the planned audit procedures or evaluate the audit results related to significant risks;
2. The extent to which the auditor plans to use the work of the company's internal auditors in an audit of financial statements;
3. The extent to which the auditor plans to use the work of internal auditors, company personnel (in addition to internal auditors), and third parties working under the direction of management or the audit committee when performing an audit of internal control over financial reporting;
4. The names, locations, and planned responsibilities of other independent public accounting firms or other persons, who are not employed by the auditor, that perform audit procedures in the current period audit; and
5. The basis for the auditor's determination that the auditor can serve as principal auditor, if significant parts of the audit are to be performed by other auditors.
6. The auditor should communicate to the audit committee significant changes to the planned audit strategy or the significant risks initially identified and the reasons for such changes

Ans 3) The purpose of the client written representation letter is attesting to the accuracy of the financial statements that the company has submitted to the auditors for their analysis.

it includes the following:

• The proper presentation of the financial statements in accordance with the applicable accounting framework
• All financial records have been made available to the auditors
• All board of directors minutes are complete
• Management has made available all letters from regulatory agencies regarding financial reporting noncompliance
• There are no unrecorded transactions
• The net effect of all uncorrected misstatements is immaterial
• The management team acknowledges its responsibility for the system of financial controls
• All related party transactions have been disclosed
• All contingent liabilities have been disclosed
• All unasserted claims or assessments have been disclosed
• The company has disclosed all liens and other encumbrances on its assets
• All material transactions have been properly recorded
• Management is responsible for systems designed to detect and prevent fraud
• Management has no knowledge of fraud within the company
• The financial statements conform to the applicable accounting framework