[Illustrative Checklist] for Verification of Cash and Bank Balances to be Followed by the Auditor

Cash and bank balances often make up a substantial portion of an entity’s total assets. A crucial aspect of cash and bank balances, which greatly influences the audit procedures involved, is their susceptibility to misappropriation, misapplication, and various forms of fraud. To ensure the accuracy and reliability of financial statements, auditors follow a systematic approach to examining cash and bank balances. By following a checklist, auditors can keep control of the audit activities required to be followed on cash and bank balances, ultimately enhancing the overall transparency and credibility of financial reporting. This discussion includes an illustrative checklist that auditors can follow to effectively verify cash and bank balances during an audit engagement.

I. Has the auditor studied and evaluated the system of internal control relating to cash and bank balances to determine the nature, timing, and extent of his other audit procedures

II. Has the auditor reviewed the proper authorization of cash and banking transactions

III. Whether the auditor has checked the segregation of duties relating to the authorization of transactions, handling of cash/issuance of cheques, and writing of books of account, as well as the rotation of duties periodically

IV. Has the auditor evaluated the daily recording of cash transactions

V. Whether the auditor has checked the safeguards such as restrictive crossing of cheques and the use of pre-printed, pre-numbered form

VI. Has the auditor reviewed the periodic reconciliation of bank balances

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