Auditing

Review the cash narrative memo. Identify and document two internal control weaknesses over bank reconciliations. Explain why each item identified is a weakness.

Bank Reconciliation Process Lindsay McKenna reconciles the bank accounts monthly. Lindsay begins by inputting the ending cash balances per bank and general ledger into a reconciliation template. She reconciles last month's outstanding check registers, the outstanding checks listed on the last month's bank reconciliation, and this month's outstanding check register. This process verifies that all checks clearing the bank are removed from the outstanding check register and also identifies any new checks to be included if they have not cleared the bank. Lindsay lists the outstanding checks on the bank reconciliation, including the check number and amount. Any outstanding checks greater than 90 days are voided. Lindsay attempts to follow up with the vendor prior to voiding. If necessary (e.g., if the vendor did not receive the check), a new check is issued. pak Alpine Cupcakes, Inc. Cash Narrative Audit Year December 31, 20X2 Cambridge B Performed by: ARO Date: 1/15/2013 Reviewed by: 7 Date: 01/22/2013 Garcia ang Bank Reconciliation Process (continued) Performe Date: 1/1 Cash Re Any deposits made at the end of the month that have not cleared the bank per the bank statement are included a deposits in transit. Lindsay reviews all deposits for 5 days before month end to ensure they are handled properly a the reconciliation process. Lindsay McKenna reviews the bank statement for any bank charges or other items that have not been recorded as of month end. Other common reconciling items include interest earned, NSF checks deposited, bank fees, notes receivable and payable, and any corresponding interest. An adjusting journal entry is made for any transactions the need to be recorded for month end in relation to the balance per the book. Miguel Lopez reviews and signs off on the reconciliations. Any unreconciled differences older than 3 months are written off as a miscellaneous expense after a full review and investigation by Lindsay