132CHAPTER 10

132CHAPTER 10 - Cash and Financial Investments CHAPTER...

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1 Bob Anderson, UCSB CHAPTER 10-1 10 CHAPTER Cash and Financial Investments Bob Anderson, UCSB Intro & Chapter 10-2 Management Assertions When auditors test cash, what management assertion/s are they MOST interested in? Existence WHAT ABOUT THE OTHERS: E-C-R-V-P? Completeness Rights & Oblig. Valuation Presentation & discl. YES, but remember “conservatism” Yes, MAYBE IT IS “restricted” Probably not Yes, if restricted, need to present and disclose as such Bob Anderson, UCSB Intro & Chapter 10-3 CASH CONTROLS Generally two broad categories: (1) Cash receipts (2) Cash disbursements Bob Anderson, UCSB Intro & Chapter 10-4 Cash Controls Why are cash controls important? ± Cash is most susceptible asset to theft. ± Because ultimately everything culminates in cash, consequently other problems frequently manifest themselves as unknown “reconciling items” when the bank reconciliation is performed. What do you think are the two most important cash controls to have? ± Segregation of duties (forces collusion) ± Check signing authority (have to get the cash out of the bank in order to steal it!
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2 Bob Anderson, UCSB Intro & Chapter 10-5 Internal Control Over --Cash Receipts ± Cash sales ± Involvement of two or more employees ± Cash Registers ± Electronic point of sales systems ± Collections of receivables ± Initial listing of cash receipts ± Custody and depositing of cash receipts ± Maintenance of customer account records ± Reconciliation of customers’ ledgers with control accounts ± Mailing monthly statements to customers ± Collection activity and past-due accounts Bob Anderson, UCSB Intro & Chapter 10-6 Potential Misstatements--Cash Receipts ± Recording fictitious cash receipts ± Failure to record receipts from cash sales ± Failure to record cash from collection of accounts receivables ± Early (late) recognition of cash receipts CAN BE ANYTHING IN THERE!
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132CHAPTER 10 - Cash and Financial Investments CHAPTER...

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