Fundamentals of Auditing
Covering Lecture 23-34
Topic for Discussion: “Testing the Cash System”
- To assess the knowledge related to verification approaches used during audit process
- To understand the process of testing the cash system in a business entity
- To know the importance of cash transactions in the business
- To asses and understand the verification process for cash transactions during audit
The purpose of testing the cash system during an audit is to establish compliance with the method of accounting and tax practices applicable in Pakistan that leads to form an opinion on the reliability of financial statements in all significant aspects. This direction of the audit can be implemented to conduct both mandatory and proactive audit, and can also be the subject of a separate contract, but most often is an integral part of the general audit.
XYZ Ltd. – a leather manufacturing company, makes a contract with Xee & Co. for general audit. You being an employee at Xee & Co. nominated as a member of audit team for conducting the audit of XYZ Ltd. The team lead has assigned you the responsibility to verify the sales made by the company based on cash transactions.
What control measures (describe any five) you will check during verification of sales based on cash transactions?
- Carefully review your GDB before submission as it cannot be replaced once it is submitted.
- Your discussion must be based on logical aspects of the topic requirements with proper justification.
- Use the font style “Times New Roman” and font size “12”.
- Your answer should be relevant to the topic i.e. clear and concise.
- Word limit for GDB is 300.
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- For planning your semester activities in an organized manner, you are advised to view schedule of upcoming Assignments, Quizzes and GDBs in the overview tab of the course website on VULMS.
- As you know that load shedding problem is also prevailing in our country. Keeping in view the fact, you are advised to submit your GDB well before time without waiting for the due date. For your convenience; you have been communicated so that you can manage your activities, therefore no excuse will be entertained after due date of GDB.
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