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Substantive procedures are essential in verifying the accuracy, existence, and completeness of cash balances. These procedures are linked to relevant financial statement assertions to ensure the reliability of reported cash amounts.
1. Substantive Procedures by Relevant Assertion
1. Substantive Procedures by Relevant Assertion
2. Most Critical Substantive Procedure: Bank Reconciliation Testing
2. Most Critical Substantive Procedure: Bank Reconciliation Testing
A well-prepared bank reconciliation is a primary control in cash auditing. The auditor should:
Verify the "Balance per Bank" – Confirm it with direct bank confirmations.
Check Deposits-in-Transit – Ensure they appear on subsequent bank statements.
Investigate Outstanding Checks – Confirm that they cleared after year-end.
Identify Unusual Reconciling Items – Investigate any adjustments or anomalies.
By applying these substantive procedures, auditors can detect misstatements and fraud in cash balances.
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