IMPROPER CASH AUDIT
https://www.youtube.com/watch?v=Oi1B6CC1c8I
NOTES:
a) What is presented in the video are the normal audit procedures for the cash count.
b) Focus on what is presented in the video regarding audit procedures performed by the
auditor during the cash count. That audit procedures presented are the subject of your
comments to identify what are the deficiencies. Do not assume other things.
c) The cash count should be done during the business operations and during the early
business hours.
d) The essence of ‘the business operations should not be disrupted during the count’ means
that business operations should not stop to give time to do the cash count.
e) The checking of the paper bills are fake or not is basically necessary for thorough audit,
particularly for financial institutions like banks. In the case of the video, the normal audit
procedures are presented for the cash count.
REMINDERS:
a) Wrong choice of word, particularly material use of inappropriate term, will make your
answer incorrect (zero points), or with lesser points.
b) The entity under audit in the video is using the computerized accounting system in which
the program includes the cash count for balancing purposes.
• Acknowledgement by the cash custodian of the returned cash items after the count may
also be done through the system. The manual acknowledgement by the cashier can be
done if the count sheet is a hard copy and not soft copy as in the case in the video.
c) Focus on the audit procedures deficiency as required by this assessment and not on the
weaknesses or deficiencies of the client’s internal control.
d) Your answer that conflicts with the next sentence for a certain number may receive lesser
point or no points at all depending on the nature of the conflicts or answers.
e) When you say to be counted simultaneously, this is a vague or not clear answer.
Simultaneous with what? Counting of cash with other cash fund or marketable securities?
But it is wrong to say simultaneous counting by the auditor and the cashier. It is the auditor
who will perform the cash count and the cash custodian is observing or witnessing the
count that he/she is accountable.
f) If you say the auditor did not count manually (depending on your concern based on your
answer), it means the auditor is doing it using computer application. Counting the paper
bills using a bill or coin counter is a manual audit but assisted by a machine. It is not the
machine who processes alone the requirements of the audit procedures.
g) If you say, there is improper handling of cash register, what is proper or improper handling
of cash register? Very broad concept. Be specific.
h) If you say, the auditor did not double check the cash count, this is a very broad idea. What
do you mean by “double check”? It is not clear.
i) There is no presentation prior to actual count that there is no element of surprise aspect.
The video showed only the moment when the auditor will start doing the cash count.
j) In writing your answer in a case (Through video) like this, never say the girl who counts.
Identify if she is the auditor or the cash custodian or cashier.
k) Do not identify the deficiency in audit procedures in a general way. Be specific.
• The auditor did not perform the audit properly. So, what is proper now and what is not
proper? That is the concern or requirements of this seatwork which is to identify the
•
1.
2.
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deficiency in audit procedures based on what the auditor did in the video presentation.
Therefore, it requires specific answer or deficiency not generic.
Bills and coins are not counted well. So, what is “not counted well”? What is “counted
well”? Very general. Be specific.
The auditor allowed the cashier take the
money alone from the vault or cash safe
because she was entertaining other
personnel at the start of her audit. (The
auditor did not accompany the cashier in
doing this thing). The auditor witness or
observe the cashier taking the cash
drawer frim the vault or cash safe to
avoid concealment of any shortages, if
any.
The auditor should let the cashier enters
her access code to access the related
portal or specific application regarding
cash to be counted. This means the
auditor knew the access code
beforehand and may lead to question by
the cashier in case there is a shortage or
overage.
The other layers of the drawers are
already unlocked while the auditor is
counting the cash items from the other
drawer layers without observation by the
cashier. This may lead to possible
problem in the end like denying any
shortages, if any, because she does not
observe the actual physical counting of
cash items.
The auditor did not observe how the
cashier put the cash box inside the cash
drawer. Transfer or movement of
physical cash from one drawer or place
to another is not also observed. This
may lead to concealment of any
shortages or overages.
The auditor never minds if the cashier
was witnessing or observing her physical
cash count. This may lead to possible
problem in the end like denying any
shortages, if any, because she does not
observe the actual physical counting of
cash items.
1.
The auditor did not recount the
money after counted by the
machine. Manual counting as a
double check by the auditor is on a
case to case basis regarding this
situation.
2.
The auditor did not ask the cashier
to acknowledge the return of cash
items The system is a computerized
one.
6.
The auditor allowed the cashier to
entertain customers or guests, or doing
something, instead of requiring her to
witness or observe her cash count. The
auditor should stop for a while and close
the cash drawer while the cashier is
entertaining customers or guests but
only for a few seconds.
7.
The auditor allowed the cashier to talk
with her regarding other matters while
performing the cash count.
8.
The auditor allowed the cashier not to
recount the cash items counted as she
returned these items inside the cash
drawer.
9.
The auditor did not instruct the cashier
to lock the cash drawer before counting
the paper bills using the counting
machine.
9.
Other cash items like coins were
counted by the cashier without
observation by the auditor on how the
former performed the counting. This
may lead to wrong counting to conceal
any shortages.
10. The auditor did not inspect the inside of
all cash drawers to determine if there
are other cash items to be counted.
This will lead to possible cash theft if
there are other cash items not counted
by the auditor.