Question $25(3$ points$)$

$2$:

Laurie, your staff auditor, was assigned to plan the tests of the client's bank account reconciliation: Balance per Bank Deposits in Transit $-$ Outstanding Checks $=$ Balance per Books $($accounting records$).$

Laurie documented the following: "I plan to test the mathematical accuracy of the bank reconciliation. I will have the client prepare and mail confirmations to the bank. I will test the deposits in transit by agreeing them to photocopies of the deposit slips made when checks were received by the cashier's department. I plan to test the outstanding checks by agreeing them to photocopies of the checks made when the checks were signed by the Controller. Finally, I will agree the book balance to the accounting records."

What would your feedliack to Laurie be$?$

Your planned procedures include appropriate substantive tests for cash in bank, but the client cannot prepare and mail the bank confirmations. You must mail the confirmations. If you can agree the outstanding checks to the accounting records, that would be better than the photocopies.

Your planned procedures include appropriate substantive tests for cash in bank, but the client cannot prepare and mail the bank confirmations. You must mail the confirmations. Additionally, to test the deposits in transit and the outstanding checks, you must obtain the cutoff statement from the bank to test whether the deposits were credited by the bank and outstanding checks cleared