Question

You are the in-charge auditor examining the financial statements of the Gutzler Company for the year ended December 31. During late October, with the help of Gutzler’s controller, you completed an internal control questionnaire and prepared the appropriate memoranda describing Gutzler’s accounting procedures. Your comments relative to cash receipts are as follows:
All cash receipts are sent directly to the accounts receivable clerk with no processing by the mail department. This clerk keeps the cash receipts journal, prepares the bank deposit slip in duplicate, posts from the deposit slip to the subsidiary accounts receivable ledger, and mails the deposit to the bank.
The controller receives the validated deposit slips directly (unopened) from the bank. She also receives the monthly bank statement directly (unopened) from the bank and promptly reconciles it.
At the end of each month, the accounts receivable clerk notifies the general ledger clerk, by journal voucher, of the monthly totals of the cash receipts journal for posting to the general ledger.
Each month, the general ledger clerk records the total debits to cash from the cash receipts journal. The clerk also, on occasion, makes debit entries in the general ledger cash account from sources other than the cash receipts journal; for example, funds borrowed from the bank. Certain standard auditing procedures listed below already have been performed by you in the audit of cash receipts:
All columns in the cash receipts have been totaled and cross-totaled.
Postings from the cash receipts journal have been traced to the general ledger.
Remittance advices and related correspondence have been traced to entries in the cash receipts journal.

Required:
Considering Gutzler’s internal control over cash receipts and the standard auditing procedures already performed, list all other auditing procedures that should be performed to obtain sufficient audit evidence regarding cash receipts control and give the reasons for each procedure. Do not discuss the procedures for cash disbursements and cash balances. Also, do not discuss the extent to which any of the procedures are to be performed. Assume adequate controls exist to ensure that all sales transactions are recorded. Organize your answer sheet asfollows:


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  • CreatedJanuary 09, 2015
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