An audit is the identification in the financial statements of an enterprise of any inconsistencies with the actual state of affairs and the finding of the reasons for such inconsistencies in the enterprise accounting system. There are various types of audit relating to different types of business transactions and different objects of analysis and verification. One of these types is cash audit. We will talk about him in our article today.
Audit of funds is a check of the fact of the availability of funds at the disposal of the enterprise and the correctness of the display of their movement in the documents. Validation of the accounting of money and equivalents is critical for the enterprise. Still - accounting and audit of funds concern the circulatory system of any enterprise - money, which form its liquidity and act as a universal tool for doing business.
Like any other type of audit, the audit of cash at the enterprise includes checking the cash of the company according to the following criteria:
Existence - the auditor must make sure that the funds indicated in the documentation are indeed at the disposal of the enterprise. To do this, the auditor recounts the cash desk, and also looks at statements from the bank accounts of the enterprise.
Ownership - the audit of funds should establish whether the firm has the right to own all the money, or some of the funds do not belong to the enterprise. For example, the salary of employees located at the cash desk is still at the enterprise, however, in fact, it is about to become the property of the company's employees.
Assessment - the audit of cash should show whether the cash of the company, as well as their equivalents, are valued correctly. If everything is clear with cash and money in accounts in the national currency, then things are more complicated with equivalents. Equivalents typically include currency values, banking metals, and short-term securities. The most difficult thing is to establish the real value of these assets on the day of the audit and, thus, confirm or deny the correctness of the cash valuation. Verification of cash, although it seems at first glance quite simple, can be fraught with many surprises and problems for the auditor.
The audit of funds is carried out using various kinds of documents that serve as confirmation of the commission of certain operations, as well as the availability of money at the disposal of the enterprise. Such documents include bank statements on the state of the enterprise’s accounts, warrants (expense and receipt), showing the movement of funds at the cash desk, settlement documents with accountable employees, which show the issuance and return of funds for various kinds of acquisitions, and other documents. After the primary documents have been verified , it is necessary to verify the correctness of the posting of the results of operations to accounting accounts, and then check the correctness of their entry in the registration books , general ledger and the accuracy of the display of the results in the financial statements of the enterprise. This allows you to trace all the stages of accounting for cash transactions and timely identify any kind of discrepancy.
Like any other type of audit, the audit of funds ends with the preparation of an audit report (letter, conclusion), in which the inspector gives his assessment of the state of accounting for money and expresses its positive or negative judgment depending on the severity (materiality or materiality) of errors and errors identified during the inspection.
As you can see, cash audit is not much different from other types of checks, with the exception of only a few points. Good luck with your checks !!!