Cash receipt: accountant matches it with invoice and delivery note and then records the accounting entries-> Assertions?

Accuracy, cut-off, rights and obligations

What is the journal entry for payment received from a customer?

DR Cash, CR Accounts Receivable

What information do you need to prepare the request for a bank confirmation? (C = client; B= bank)

C's name & contact, B's name &address, period-end date, PwC contact&address

What do you do with the returned original bank confirmation letter?

Reconcile with client’s records and follow up on differences/other info

Client has offered to prepare the bank confirmation requests if you send them the template to be used. Appropriate?

Yes, the client can prepare as long as audit team maintains control

Petty cash is counted each day and reconciled with cash sub-ledger (SL). How does this procedure help?

Detects cash receipts not accurately recorded in the SL in a proper amount

To gather evidence that cash balances have been recorded in the correct accounting period -> which procedure?

Check the bank statement following the period end to ensure proper C/O

Reason for differences between cash balance in the client's GL and balance on the bank statement?

Cash transactions recorded by the bank not yet recorded in GL

If management refuses to allow to send a bank confirmation request -> Following procedures to be performed?

Evaluate implications of management’s refusal on the assessment of RoMM

During the audit, you notice that the cash balance in the BS is 560.000 compared to the GL amount of 559.000 -> Reason?

1k deposit of interest income not posted in GL as received after closing

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Assurance 1 Week 2 in 2021 cash

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Assurance 1 Week 2 in 2020 cash

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1
Cash receipt: accountant matches it with invoice and delivery note and then records the accounting entries-> Assertions?
Accuracy, presentation and disclosure
Accuracy, cut-off
Accuracy, cut-off, rights and obligations
Completeness, cut-off
2
Who can send the confirmation request letter to a bank (to be used for the purpose of the audit)?
PwC only
Client only
Any party involved in the business operations of the company
PwC or the Client
3
What is the journal entry for payment received from a customer?
DR Fixed Assets, CR Accounts Receivable
CR Cash, DR Accounts Receivable
DR Cash, CR Accounts Receivable
DR Cash, CR Accounts Payable
4
Which financial statement assertions does the EGA “Confirm bank accounts and special arrangements” typically address?
A, C, C/O, E/O, P&D, R&O, V
C, E/O, P&D, R&O
C, C/O, E/O, V
A, C/O, R&O, V
5
What information do you need to prepare the request for a bank confirmation? (C = client; B= bank)
C's name & contact person, charge code, B's name, period-end date
B's name & address, PwC contact person & address, period-end date
C's name & contact, B's name &address, period-end date, PwC contact&address
C's name, B's name and address, period-end date for confirmation
6
What do you do with the returned original bank confirmation letter?
Call the bank to confirm it came from a reliable source
Indicate in audit file that confirmation was received + include in doc. lib
Agree confirmed amount(s) to bank statement received by client in the past
Reconcile with client’s records and follow up on differences/other info
7
Client has offered to prepare the bank confirmation requests if you send them the template to be used. Appropriate?
No, the client cannot have any involvement in the confirmation process
Yes, the client can prepare as long as audit team maintains control
Yes, ISA 505 allows for clients to prepare & send IF you call the bank
No, as it is not appropriate for you to send the client PwC templates
8
Which assertion(s) can you cover by audit procedure “Test translation of foreign currency - Cash and cash equivalents”?
Valuation
Completeness & Accuracy
Completeness, Accuracy, Presentation & Disclosure
Completeness
9
Petty cash is counted each day and reconciled with cash sub-ledger (SL). How does this procedure help?
Detects cash receipts not accurately recorded in the SL in a proper amount
Prevents cash receipts from being misappropriated
Prevents cash collections from being recorded incorrectly by the bank
Prevents cash receipts being applied to the wrong customer account
10
To gather evidence that cash balances have been recorded in the correct accounting period -> which procedure?
Compare amount recorded by client to the amount recorded in bank statements
Test the mathematical accuracy of the bank reconciliation
Review bankreconciliation to ensure it has been performed on a timely basis
Check the bank statement following the period end to ensure proper C/O
11
Reason for differences between cash balance in the client's GL and balance on the bank statement?
Cash transactions recorded by the bank not yet recorded in GL
The same errors and omissions have been made by both the bank & the client
There can not be differences between the GL and the bank statement
The same cash transactions are incorrectly recorded by both client and bank
12
If management refuses to allow to send a bank confirmation request -> Following procedures to be performed?
Call the bank directly
Document it in the audit file and do not perform alternative procedures
Ignore management's refusal and send out the confirmation anyway
Evaluate implications of management’s refusal on the assessment of RoMM
13
During the audit, you notice that the cash balance in the BS is 560.000 compared to the GL amount of 559.000 -> Reason?
1k deposit of interest income not posted in GL as received after closing
Reconciling items between subledger and GL are adjusted by client
Identified misstatement of 1k credited to cash for expense reimbursement
Remittance of 1k is received after the year end

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