AUDIT PROGRAM for Cash Receipts Transactions and Cash Balances

Hereunder is a useful audit program for auditing Cash Receipts Transactions and Cash Balances:

Audit Objective: To determine whether cash balances at month-end/year-end are valid and actually exist.

Analytical Procedures:

1. Compare cash accounts with those of prior years and investigate additions or deletions of accounts;
2. Compare cash receipts from miscellaneous sources with those of prior year and account for major changes.

Other Procedures:

3. Count and list cash on hand at year-end and trace to cash receipts record and bank statement.
4. Vouch significant cash receipts from sources other than customers and trace to deposit slips and bank statements on a test basis.
5. Confirm bank balances directly with bank and BTr. Compare replies and investigate differences, if any.
6. Reconcile bank accounts as of year-end.
7. Obtain cutoff bank statement(s) directly from banks and trace reconciling items from bank reconciliation to cut-off statement.
8. Inquire as to status of inactive bank accounts.
9. Review GL account balances and trace postings from the underlying receipts and supporting documents to the reports and journals.
10. Prepare/obtain schedule of collections and deposits per bank account as of month-end/year-end.
11. Compare schedule with SL accounts. Examine the schedule footings and compare totals with the GL.
12. Review/verify bank reconciliation statements.
13. Note differences between bank and book balances and verify whether reconciling items are properly recorded in the books of accounts.
14. Prepare draft AO and discuss with management officials concerned before issuance.