Internal Control (Auditing)?

Question

can anybody briefing in detail about the objective internal control in auditng (cash receipt and cash payment only)

Answer 1

Looks like your supervisor is not on the ball. What kind of incompetent management is that? If that kind of treatment goes on for the next coupla months, I would strongly consider joining another CPA firm or company. Either that or you are short on time understanding your study text. :P

I'll meet you half way on the receipts portion. Roughly:


Cash receipts
(Objective = O; to meet assertions of Completeness, Obligations & Rights, Accuracy, Existence, Valuation & Allocation, Presentation & Disclosure, in the financial statements.)

1. Cash received recorded in the Cash and Bank book (not the actual bank book of the company), is accurately (O) recorded and timely, e.g. on the same day.

This allows the coy (not the external auditor) to knock off amounts owed to the company (coy), to check for:

- days outstanding for credit control, i.e. monitor amt. and duration the coy is willing to sell on credit to the customer.

- a general indicator if the customer is able to pay the coy when matched against the customer's credit history

- allows departments / divisions to monitor cash inflow and therefore plan for investment opportunites and working capital

- avoid annoying the customer by demanding a second payment when the customer has already paid.


2. Cash received recorded in the above "day book" is summed up correctly (O) and recorded (O) on a coy approved (O) journal voucher.

- The sum of all receipts is accurately (O) calculated, and transfered (O - i.e. no ommissions in recording) to the journal voucher, checked for clerical and addition (O) errors.

- The journal voucher is checked by an independent person (other than the person preparing the journal voucher) a position of authority and competence, for clerical and arithmetical (O) errors.


3. The ledger reflects above approved journal voucher. This is to check that the correct amount (O) has been transfered (O) to the correct account classification (O).


4. Cash recorded has been deposited(O) in the coy's relevant (O) bank account as shown on a bank statement.

5. If not in the bank statement, a reconciliation of cash book to statement or vice versa will show
- bounced cheque receipts
- cheque receipts not yet cleared (cleared in subsequent period of reporting)
- missing cheque receipts
- cheque receipts ommitted or recorded in error in the coy's cash and bank account

Lastly, in practice when performing the above, refer to original documents; do not accept copies. (e.g. faxes) since you are new to the process.

Note variances which will indicate over and understatement of recorded accounts, e.g. a move of higher debtors from previous period to a lower debtors suggests
- money received or;
- debts forgiven,
so therefore you would expect your
- Cash and Bank book to reflect that difference by going up, with regards to the former
- Volume of relevant Debtors ageing to decrease; Cash and Bank book amounts to remain the same. Additionally, the relevant authorised signature or minutes of meeting to approve debt write-off.

Answer 2

If you share a workbook (even with your self you can create a history sheet that will tell you who changed data in any cell from a certain date. Excel can also trace precedents and dependent calculations between files and sheets using tracer arrows

Answer 3

aha