Question

The following is an audit working paper prepared by an assistant on the Williams audit:    f Column footed. ? Amount agrees to amount recorded as a deposit on the bank statement and description agrees with receipt enclosed with 12/31/0X bank statement. This note is the Wilde note receivable that was recorded as a receipt by the client in the cash receipts journal on 1/3/0X. The receivable was appropriately credited and properly reflected in the January cash receipts journal. No adjustment needed as bank and books simply record this in different periods. ? Agreed to 12/31/0X bank statement. ? Agreed to general ledger. A - 1 Required: Prepare a list of review points as the preparer of this working. You may assume that any other working papers referred to are appropriate. You will receive credit for proper points you bring up and lose credit for improper ones and omissions.

Answer 1

EXPLANATION --- Following is the review points

The working paper's lacks:

• "prepared by" is not initialed ("Review by" isn't either, but since we are still performing the review it need not be).

• Title of schedule is wrong, this is not a bank confirmation, it is a bank reconciliation.

• By Balance per Bank is incorrect for two reasons. First, the balance would not be in the general ledger. Second, the balance per bank should be agreed to either a bank confirmation, bank statement, or both.

• The bank service charge should be added, not subtracted.

• Concerning balance per books, two things are wrong. First it is not footed in that is missing. Second, it does not fit properly.

• The tickmark is incorrect relating to the deposit in transit. If it was on the 12/31/0X bank statement, it would not be a deposit in transit.

• The description is not correct since it should be recorded as a cash receipt as of 12/31/OX if the bank collected it prior to year-end. It is handled on the reconciliation properly, but the comment is wrong.