1. The existence/occurrence assertion with respect to cash implies that recorded balances reflect the true underlying economic value of those assets.
2. Common cash accounts include lockboxes, electronic funds transfers, cash management agreements, and compensating balances.
3. Inherent risk for cash is usually assessed as high because cash may be used for unauthorized purposes, posted to the wrong customer's account, or not recorded on a timely basis.
4. The volume of transactions flowing through cash accounts throughout the year makes the account highly susceptible to error.
5. Lapping occurs when an employee steals a payment from one customer, and covers it up by using payments from another customer to disguise the theft.
6. Skimming occurs when an employee purchases merchandise and records the sale at an unauthorized discounted price.
7. Controls for completeness of cash are important because they help to provide reasonable assurance that the cash actually does exist.
8. Because the primary concern is that cash will be stolen and is thus understated, the auditor is not usually concerned about overstatements of cash.
9. Analytical procedures are particularly useful to the auditor in gaining assurance about the cash account because the usually small ending balances in cash tend to be stable over time.

  • CreatedSeptember 22, 2014
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