Does company policy prohibit accepting checks for

 Does company policy prohibit accepting checks for anything except
merchandise sales plus a nominal cash amount?
 Is a receipt produced by the cash register given to each customer?
 Is the reading of each cash register taken periodically by an employee who is
independent of the handling of cash receipts?
 Are cash counts made on a surprise basis by an individual who is independent
of the handling of cash receipts?
 Is the reading of each cash register regularly compared to the cash received?
 Is a summary listing of cash register readings prepared by an employee who
is independent of the physical handling of cash receipts?
 Are receipts forwarded to an independent employee who makes the bank
deposits?
 Are each day’s receipts deposited intact daily?
 Is the summary listing of cash register receipts reconciled to the duplicate
deposit slips authenticated by the bank?
 Are entries to the cash receipts journal prepared from duplicate deposit slips
or the summary listing of cash register readings?
 Are entries to the cash receipts journal compared to the deposits per bank
statement?
 Are areas involving the physical handling of cash reasonably safeguarded?
 Are employees who handle receipts bonded?

Audit of the Revenue and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
5-13
5-28. 1. a. Existence
b. Cash may be misappropriated or lapping may occur.
c. Observe separation of duties and inquire of personnel about their
responsibilities.
d. For selected days, trace entries in the cash receipts journal to validated
deposit ticket, prelisting of cash receipts, and posting to accounts
receivable.
2. a. Existence
b. Fictitious cash receipts may be recorded or cash receipts may be
misappropriated.
c. Observe whether a prelisting is prepared and inquire of preparer about
the procedures followed.
d. For a sample of entries in the cash receipts journal, trace to the prelisting
of cash receipts.
3. a. Completeness
b. Cash may be unrecorded or misappropriated.
c. Observe the procedure and inquire of personnel who perform the
procedure.
d. For a sample of entries in the cash receipts journal, compare prelisting to
the deposit ticket.
4. a. Existence
b. Bank reconciliations may hide shortages.
c. Examine bank reconciliations and determine that the preparer does not
have conflicting interests.
d. Test bank reconciliations.
5. a. Valuation
b. A customer may take a larger discount than appropriate.
c. For a sample of entries in the cash receipts journal, examine remittance
advices for approval of discounts taken.
d. For a sample of entries in the cash receipts journal, examine remittance
advices and verify that discount taken was appropriate.
6. a. Existence
b. The cashier may misappropriate a portion of the cash receipts.
c. For a sample of entries in the cash receipts journal, reconcile the total to
validated deposit tickets.
d. For a sample of entries in the cash receipts journal, examine remittance
advices.