Bus 426 - Chapter 16

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Business Administration
BUS 426
Michael Favere- Marchesi

Chapter 16 -Audit of Cash Balances Cash and the Transaction Cycles Types of Cash Accounts  General Cash Account: The primary bank account for most organizations; virtually all cash receipts and disbursements flow through this account at some time  Imprest Payroll Account: A bank account to which the exact amount of payroll for the pay period is transferred by cheque from the employer’s general cash account  Branch Bank Account: A separate bank account maintained at a local bank by a branch of a company  Imprest Petty Cash Fund: A fund of cash maintained within the company for small cash payments; its fixed balance is comparatively small, and it is periodically reimbursed  Cash Equivalents: Excess cash invested in short-term, highly liquid investments, such as term deposits, certificates of deposit and money market funds Audit of the General Cash Account Internal Controls  Controls over the Transaction Cycles  Independent Bank Reconciliations: A monthly reconciliation of the differences between the cash balance in the general ledger and bank account o Standard Bank Confirmation Form: A form used by Canadian bankers to respond to auditor’s request  Auditors write to the bank, if they don’t respond, then they write again or maybe phone o Cut-off Statement: A partial-period bank statement with duplicates of deposits, cancelled cheques and other related documents mailed directly to the auditor  Used to verify reconciling items in
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