Audit Program

Cash and Cash Equivalents

1. Explain significant fluctuations in the amounts in cash balances from the prior year

2. Prepare or obtain from the client a listing of all cash accounts open as of the balance-sheet date or
opened and closed during the period under audit, showing (a) account number and type, (b) custodian,
and (c) balance per the general ledger.

3. Request that the client prepare bank confirmation forms for bank/custodian accounts used during
the period under audit (including accounts closed as of the balance sheet date). Maintain control of the
bank confirmation forms and mail directly to the bank/custodian.

4. Ask the client to request copies of the daily bank statements (including all supporting documents) for
a period of 5 days subsequent to the balance-sheet date to be mailed by the bank directly to the
auditor.

5. Prepare or obtain an analysis of savings accounts, certificates of deposit, and other interest-bearing
accounts showing (a) name of institution, (b) interest rate, (c) maturity date, (d) balances at the
beginning of the period, (e) activity during the period, (f) balances at the end of the period, and (g)
interest income and related accruals, and perform the following:

a. Trace book balances, interest income, and interest accrued to the general ledgers

Compare balances and interest rate per passbooks and certificates of deposit to returned
confirmation forms.

c. Test the arithmetical accuracy of the analysis.

d. Recalculate interest earned and evaluate results for reasonableness.

6. Prepare or obtain a schedule of bank payment orders for a period of 5 days before and after the
balance sheet date, showing the (a) name of disbursing bank, (b) payment order or transfer number, (c)
amount of transfer, (d) date transferred out per books, (e) date transferred out per bank, (f) name of
receiving bank, (g) date transferred in per books, and (h) date transferred in per bank, and perform the
following:

a. Review the cash receipts and cash disbursements journal, bank statements, and journal
entries for 5 days before and after the balance sheet date and determine whether they are all
included in the schedule of bank payment orders.

b. Determine if all receipts and disbursements per books are recorded in the correct period.

c. Investigate any disbursements with bank statement dates that precede the dates per books.
 d. Determine whether the number of days’ lag between bank statement dates and dates per
books appears reasonable and investigate any unusual delays.

7. If bank statements are not requested and/or not received directly by the auditor, obtain the bank
statement for the month subsequent to the balance sheet date and perform the following:

a. Test the arithmetical accuracy of the bank statement.

b. Compare bank payment orders listed in the bank statement to the totals per the client’s
records.

c. Foot client’s copies of deposits slips and compare them to totals show per the bank
statement.

d. Inspect the bank statement for alterations.

8. Determine which petty cash funds should be counted and perform the following:

a. Count petty cash funds in the presence of a client representative.

b. Summarize cash counted by denomination. Include other items such as coins and other
stamps.

c. Reconcile the balance per the custodian to the general ledger.

d. At the conclusion of the count, return all items to the custodian and ask for a signed receipt.

9. Ascertain that the requests for bank confirmations and confirmations with other custodians have
been received, signed, and all questions have been answered. Follow up on all comments and missing
information.

10. Review the confirmations received from the banks or other financial institutions and determine
whether any of the following exists:

a. Accounts are subject to withdrawal restrictions, minimum balance requirements, or

compensating balances.

b. Guarantees, letters of credit, or contingent liabilities.

c. Arrangements for related parties, such as guarantees.

d. Commitments and contingencies.