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Tugas Auditing Section 9.

[1] Why is the audit of cash an important part of the audit?

The audit cash has an important part of the audit because investors rely on the accuracy of
the cash account when evaluating the financial health of a company.
Auditing cash is an important part because it helps investors to understand the company's
accuracy in its financial condition. They can check company's current assets which is prominent part
of cash and helpful to understand the company's current position. It also helps to decide the price of
stocks. Additionally, auditors can ensure that there is no cash fraud in the company

[2] Bill performed tests of controls for all transaction cycles with good results. Why is it important to also
perform substantive audit procedures for the ending cash balance even when tests of controls over
transactions that affect the cash account indicate that those controls are operating effectively?

Auditors use two major audit strategies. Those audit strategies are reliance and substantive.
Reliance is used when tests of controls demonstrate that controls are operating effectively. Auditing
standards require substantive evidence for all significant accounts and assertions. Reliance strategy
reduces the amount of substantive test required but substantive tests cannot be entirely eliminated.

[3] According to AICPA auditing standards, what are the necessary ingredients for audit evidence to be
considered “appropriate”?

Appropriateness is a measure of the quality of audit evidence. When audit evidence is


considered appropriate, it must be relevant and reliable. Relevant if the evidence is related to
assertion being tested and reliable if the evidence can be relied upon to signal the true state of the
assertion being tested.

[4] For each procedure listed in the audit program (schedule C 2), indicate the primary assertion(s)
targeted by the procedure.

Audit Steps Assertion


1 Accuracy
2A Accuracy
2B Existence
2C Cutoff
2D Cutoff
2E Cutoff
2F Cutoff
3 Existence
4 Disclosure and Classification
[5] For each error, concern, or adjustment you listed on the Audit Summary (schedule C 3), briefly describe
at least one additional test you could perform to gain evidence as to whether or not the cash account is
materially misstated.

A check 5730 issued by the Woodland National Bank account was still pending for clearance
but it must have checked earlier. Therefore, auditors must check the history from the client and the
company should ensure that why client didn't claim for that even after a long time.

[6] The AICPA and the American Banker’s Association developed a standardized bank confirmation form
see working paper C 6. What is the purpose for confirming information in item number two on the bank
confirmation form? Identify the accounts and related audit assertion(s) to which the information in item
number two is relevant.

To proof the existence and accuracy auditees’s payable account in bank.

[7] What audit procedures might you perform if you were to decide that the risk of fraud involving the cash
account was relatively high for this client?

The audit procedures I would perform if I thought that the risk of fraud involving the cash
account was high would be tests for kiting (which includes checking the check dates and deposit
dates), proof of cash, and extended procedures of bank reconciliation.

[8] Perform an online search for “electronic bank confirmations.” Summarize in one page or less what
you learn about recent developments in the use of web-based bank confirmations. Include a brief discussion
of the advantages of electronic confirmations in your write-up.

The usage of automatic confirmations will substantially change the nature, procedures, scope,
and weight attributed to audit evidence. Confirmations, obtained automatically, and highly
complemented by self-correcting procedures will eventually be the most important form of audit
evidence. Automatic confirmations will substantively resolve the audit objectives of existence,
completeness, and to a certain degree accuracy at the transaction level and account aggregation
levels.