Auditing Chapter 23
Terms
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- Bank Reconciliation
- The monthly reconciliation, usually prepared by client personnel, of the difference between the cash balance recorded in the general ledger and the amount in the bank account
- Branch Bank Accounts
- Separate bank accounts maintained at local banks by branches of a company
- Cash Equivalents
- Excess cash invested in short-term, highly liquid investments such as time deposits, certificates of deposit, and money market funds
- Cutoff Bank Statement
- A partial-period bank statement and the related cancelled checks, duplicate deposit slips, and other documents included in bank statements, mailed by the bank directly to the auditor; the auditor uses it to verify reconciling items on the client's year-end bank reconciliation
- General Cash Account
- The primary bank account for most organizations; virtually all cash receipts and disbursements flow through this account at some time
- Imprest Payroll Account
- A bank account to which the exact amount of payroll for the pay period is transferred by check or electronic transfer from the employer's general cash account
- Imprest Petty Cash Fund
- A fund of cash maintained within the company for small cash acquisitions or to cash employees' checks; the fund's fixed balance is comparatively small and is periodically reimbursed
- Kiting
- The transfer of money from one bank to another and improperly recording the transfer so that the amount is recorded as an asset in both accounts; this practices is used by embezzlers to cover a defalcation of cash
- Proof of Cash
- A four- column audit schedule prepared by the auditor to reconcile the bank's record of the client's beginning balance, cash deposits, cleared checks, and ending balance for the period with the client's records
- Standard Bank Confirmation Form
- A form approved by the AICPA and American Bankers Association through which the bank responds to the auditor about bank balance and loan information provided on the confirmation