[Checklist] Audit of Cash and Bank Balances

Cash and bank balances may constitute a significant proportion of the total assets of an entity. An important feature of cash and bank balances that has a significant impact on the related audit procedures is that these assets are highly prone to misappropriation, misapplication, and other forms of fraud. In carrying out an audit of cash and bank balances, the auditor is particularly concerned with obtaining sufficient appropriate audit evidence to corroborate the management’s assertions.

One may adopt the following checklist for Audit of Cash and Bank Balances:

1. Has the system of internal control relating to cash and bank balances been evaluated?
2. Whether the following aspects of internal control relating to cash and bank balances reviewed?

a) Segregation of duties relating to authorization of transactions

b) Handling of cash/issuance of cheques and writing of books of account

c) Rotation of the duties periodically

d) Proper authorization of cash and banking transactions

e) Daily recording of cash transactions

f) Safeguards such as the restrictive crossing of cheques, use of pre-printed, pre-numbered forms

g) Periodic reconciliation of bank balances

h) Reconciliation of cash-on-hand with book balance on a daily basis or at other appropriate intervals, including surprise checks by higher authorities

i) Safe custody of cash, chequebooks, receipt books etc.

j) Cash/fidelity insurance

3. Whether the cash and bank balance been appropriately verified?

4. Whether the cash balance shown in the financial statements reconciles with the results of the physical verification after taking into account the cash receipts and cash payments between the date of the physical verification and the date of the balance sheet?

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