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Unformatted text preview: 12-42On this problem, don’t forget to look at the information given to you in the description of how this company and its banks operate! A lot of key information here will help you see the discrepancies and how the auditor should approach each item. You can number this problem 1 through 10, and list at least one specificstep the auditor should take to gain confidence in the bank reconciliation.The reconciliation on page 641 was prepared by the client. The Code Number sheet on page 640 is the auditor's documentation. You need to look at each code number listed and determine what tests to perform/questions to ask to gain confidence in the client's reconciliation. Let's look at #1. There are a few things the auditor can do to verify the Dec. 31 balances at each bank. 1: send confirmations to each bank, 2: request cutoff statements for the bank to send directly to the auditor, and 3: inquire why Bank A has a balance, when per the background information, the balances are to be transferred to Toyco's general account.You're not actually performing the reconciliations; rather you're using the reconciliation to verify Toyco's numbers.1) Request cutoff statements from the banks and have them sent directly to the auditor.2) Send a standard bank confirmation to each bank to confirm the transfers of the funds on the date noted.3) Do an independent bank reconciliation to confirm the correctness of year-end balances after the correct deposits have been made.4) Do a reconciliation to confirm the differences are indeed correct and not misstated further.5) Send a bank confirmation to confirm that the unexplained bank charge is actually valid....
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This note was uploaded on 08/22/2011 for the course AUDITING AC410 taught by Professor Prof during the Spring '11 term at Kaplan University.
- Spring '11