Cash Receipt Book Template by rjr25533

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									                                                  Audit Program - Financial Audit


                                                                   CASH
The main objectives are:
=> EXISTENCE / CLASSIFICATION / DISCLOSURE
                                                                                                      CROSS           REVIEWED
                                             TASK                                                             DONE BY
                                                                                                    REFERENCE            BY
                                                            INTERNAL CONTROLS
=> Perform walkthough of the sales / AR / cash receipts cycle.
=> Ensure that the monthly reconciliations have been approved and signed off by management.
=> Complete segregation of duties checklist for the cash process. Determine whether there is
sufficient segregation of duties between check handling responsibilities and accounts payable.
=> Are all cash receipts at the facility received through a lockbox? If no, how are cash receipts
controlled and logged at the first point of receipt?

=> Discuss cash disbursements procedures with controller. What is process for writing checks,
reconciling the check register, segregation of duties in the cash process, wire transfers, etc.       C 000
=> Review check sequences and investigate any large variations in sequence of checks. If
payments are being made by wire transfer review controls around these transactions.
=> Inquire as to security around blank checks, review manaul checks written during the year to
date and review controls over manual check writing.
=> Review the list of approved check signatures. Ensure that authorization policies for
signature of checks or approval of wire transfers are being adhered.
=> Document the handling of cancelled checks. Examine these checks to ensure that the stock
cannot be re-used. Note whether there appear to be excessive cancelled checks.
=> Determine whether facsimile stamps are used for check signatures. If so, evaluate the
security over stamp(s).
                                                             ANALYTICAL REVIEW
=> Compare fluctuations of cash accounts from prior period and explain significant
fluctuations. Explain large credit balances and other unusual items. Find out currencies held
                                                                                                      C 100
and how amounts are translated to the trial balance. Confirm exchange rate being used to
published sources.
                                               MARKETABLE SECURITIES (IF APPLICABLE)
=> Obtain the marketable securities file and review reconciliation between general ledger and
trial balance.
=> Obtain detail of investments from trustee and review for unusual items / large
=> Ensure that the total of trustee detail is reconciled to trial balance.
                                                                                                      C 200
=> Check the purchases and sales of the marketable securities (existence, price and quantity)
done on this fiscal year by making a reconciliation between the marketable securities file and
the bank statements related to them.
=> Support the reserves related to marketable securities.
                                                                  CASH BALANCE
=> Obtain and review the prior month's bank reconciliations and determine whether they are
completed timely, bear evidence of review and are performed by someone without accounts
payable responsibilities.
=> Verify bank balance matches bank statement and book balance agrees to trial balance.
                                                                                                      C 300
=> For significant reconciling items vouch to support and ensure accuracy of support
=> Obtain subsequent months bank statement and select largest five checks clearing and ensure
properly included / excluded from outstanding checklist
=> Test for mathematical accuracy of reconciliations




                                                                    Cash
                                                  Audit Program - Financial Audit



                                     ACCOUNTS RECEIVABLE (AR)
The main objectives are:
=> EXISTENCE / VALUATION / PRESENTATION
                                                                                                   CROSS-
                                            TASK                                                           DONE BY REVIEWED
                                                                                                  REFERENC            BY
                                                           INTERNAL CONTROLS
=> Perform walkthrough of sales / AR / cash receipts cycle
=> Ensure that the monthly reconciliations have been approved and signed off by executive
management.
=> Review process of approving credit limits, how are credit limits established and by whom?
=> Complete segregation of duties checklist for the AR process. Determine whether there is
sufficient segregation of duties. Is there sufficient segregation of duties between people
responsible for cash applications and generation of credit memos?
=> How do we ensure accurate order entry, correct pricing, correct quantities and correct
delivery dates so that billing information is accurate? How do we ensure proper classification
of these items?
=> How do we ensure completeness and accuracy controls over billing?                                E 000
=> Obtain and review a sample of recent credit memos and note appropriate approval.
=> Determine whether manual billing is performed. If so, why and how is it recorded?
=> What control(s) ensures that the sale and relative receivable transaction is recorded in the
proper period?
=> Determine if there is evidence of recurring billing issues (older balances on aging,
numerous credits, complaints by customers, etc.)
=> Understand the Company's method of estimating the allowance for doubtful accounts.
Ensure they have a written policy
=> Are there controls in place to ensure intercompany accounts get reconciled on a monthly
basis?
                                                                   GENERAL
=> Carry out reconciliations between ageing balance / account receivables detail to the trial
                                                                                                    E 100
balance and the balance sheet. Support large reconciling items.
=> Revie Aged Receivable Trial Balance (ATB) and segregate balances greater than 90 days.
Inquir of collectibility of larger/older balances. Review how much of these older balances have     E105
been taken into account for the allowance for doubtful accounts.
=> Rollfoward the allowance for doubtful accounts and take the bad debt expense recorded to
                                                                                                    E 110
the income statement.
=>Investigate fluctuations in the receivables account from the previous year
=> Calculate AR / Turnover, Reserves as a % of AR, AR as a percentage of Sales for both the         E 120
current and prior period. Investigate large changes in these ratios.
=> Ensure intercompany accounts are being reconciled on a monthly basis. Review
reconciliations and contact other Thomson entities to confirm these balances.                       E 130
                                                             EXISTENCE OF AR
=> Confirm the existence of AR by making a haphazard sample of large and small accounts
and vouching to subsequent cash receipts records. Discuss with controller likelihood that AR
has been collected from this time period. If no cash receipts have been recorded request ageing
from prior quarter-end and make selection from this detail. As an alternative procedure, take       E 200
receivables to shipping documentation to confirm shipment of goods.
=> Investigate discrepancies between cash received or shipments made and the receivable
balance.
=> Select a sample of 20 invoices from the AR ageing and ask for invoices to be pulled.
Ensure invoices are properly aged.                                                                  E 210




                                                                 Receivables
                                                     Audit Program - Financial Audit



                                     ACCOUNTS RECEIVABLE (AR)
The main objectives are:
=> EXISTENCE / VALUATION / PRESENTATION
                                                                                                        CROSS-
                                              TASK                                                              DONE BY REVIEWED
                                                                                                       REFERENC            BY




                                                 COMPLETENESS AND CUTOFF TESTING
Take a sample of the first and last 15 invoices before and after the audited date and:
                                                                                                         E 300
=> Ensure amounts are either correctly present or excluded from AR detail
=> Ask for the credit notes ledger of the month following the closing and see if they are related
to invoices linked to the previous fiscal period. Take a sample of large credits and have support
                                                                                                         E 310
pulled. If these relate to prior period ask if reserve has been set up to account for the reversals.

                                                            VALUATION OF AR
Validate the reserves for the bad debt and check if they are in line with the Thomson
accounting standards and procedures (chapter 8). This chapter will give you:
=> The conditions to transfer a receivable to a doubtful customer,                                       E 400
=> The percentage to allowance for the receivables according to their age.
=> Use the older ageing balances to check the completeness of the reserves.
=> Isolate the foreign currency receivables and verify their correct assessment at the closing
period. Take exchange rates used to published sources.                                                   E 410
                                                          PRESENTATION OF AR
=> Through the accounts receivable detail, determine the total amount of credit balances, ask
for the reasons for these balances and if they are significant, assess the necessity to book them        E 500
in liabilities.
=> Assess the necessity to book significant credit notes in Liabilities.
                                                                                                         E 510




                                                                    Receivables
                                                Audit Program - Financial Audit

                                                             INVENTORIES
The main objectives are:
=> EXISTENCE / COMPLETENESS / ACCURACY
                                          TASK                                                 CROSS-        DONE BY   REVIEWED
                                                                                             REFERENCE                    BY
                                                              INTERNAL CONTROLS
=> Perform walkthrough of the inventory / COS cycle.
=> Ensure that the monthly reconciliations of inventory accounts have been approved and
signed off by executive management.
=> Complete segregation of duties checklist for the inventory process. Determine whether there
is sufficient segregation of duties.
=> How do we ensure completeness and accuracy controls over inventory?
=> What control(s) ensures that as a result of a sale the related relief of inventory transaction is F 000
recorded? and recorded in the proper period?
=> Understand the Company's method of estimating the reserve for slow moving / obsolete /
excess inventory or lower of cost of market. Ensure they have a written policy.
=> Is all inventory held by Company or is some offsite. Ask to confirm with third party?
=> Does this entity have Vendor Managed Inventory. If so write memo detailing treatment of
VMI inventory. Conclude on treatment.
                                                                      GENERAL
=> Review fluctuation in inventory and allowance accounts from the previous year. Explain
significant fluctuations.
                                                                                                     F 100
=> Tie the inventory detail to the trial balance accounts. Review reconcilation if applicable.
Vouch significant reconciling items.
                                     EXISTENCE / COMPLETENESS / ACCURACY OF INVENTORIES
=>Review the previous periods cycle count procedures. Document cycle count procedures and
ask to see documentation. Inquire as to how often entire stock is covered?                           F 200
=>If site does not complete cycle counts ask to see results of most recent physical inventory.
Review book to physical adjustment.                                                                  F250
=>Haphazardly select 20 items and ask management to pull the latest invoices for these items.
Ensure all amounts are being sold for more then their cost. If significant differences exist then    F 300
expand sample or provide explanation where variance is captured.
=> Inquire as to how the standard transfer prices are calculated. How often are they updated?
=> Inventory reserve: Obtain the Company's calculation of the reserve. Ensure the
methodology to calculate is reasonable, documented, and consistent with Thomson accounting
                                                                                                     F 400
principles.
=> Obtain slow moving inventory report (sludge) and compare this to the inventory reserve.
Conclude on reasonableness of reserve.




                                                               Inventories
                                                            OTHER ASSETS
The main objectives are:
=> EXISTENCE / VALUATION
                                            TASK
                                                                 GENERAL
=> For significant other asset accounts receive reconciliations. Review balance of other asset
accounts between periods and explain significant fluctuations.
                                                      EXISTENCE / VALUATION
=> For significant other asset accounts vouch to supporting documentation and prove
existence. For example for significant prepaid amounts vouch to payment and to supporting
invoice which shows period of service and therefore proves prepaid status.
     CROSS-          REVIEWED
             DONE BY
    REFERENC            BY


      G 100
N


     G 200
                                                                            FIXED ASSETS
=> EXISTENCE / COMPLETENESS / ACCURACY
                                                                                                              CROSS-
                                                TASK                                                                               DONE BY       REVIEWED BY
                                                                                                            REFERENCE
                                                                         INTERNAL CONTROLS
=> Review sample of Purchase Acquisition Requests (PAR's) for the past year. Ensure appropriate
authorization signatures / approvals have been obtained.
=> Inquire as to the process for updating the fixed assets register. Who performs?                               K 000
=> Inquire as to how often a review is done to identify useless / impaired fixed assets.
=> Ask when the last time a fixed asset inventory was completed?
                                                                                 GENERAL
=> Obtain rollfoward of fixed assets and ensure beginning amounts agree to prior year, ending
amounts agree to current year trial balance. Ask to see reconciliation between rollforward and trial              K 100
balance if required.
=> Ask to see listing of significant leases entered into as of our audited date. Ask management if a capital vs. operating test was performed.
                                                                                                                  K 110
=> Match the fixed asset and accumulated depreciation numbers to fixed asset schedules.                           K 120
=> Carry out analytical review of the fixed asset accounts:
=> Take the balance of this year compared to last year.                                                           K 130
=> Analyze the change in the ratio depreciation / fixed asset balance.
                                                                     EXISTENCE OF FIXED ASSETS
=> Obtain the list of acquisitions for the current year. Select sample and trace back to supporting
                                                                                                                 K 200
documentation: to include authorization form (PAR) and original invoices.
                                                                 COMPLETENESS OF FIXED ASSETS
=> Take a sample of significant invoices related to the "maintenance and repair" account (P&L
                                                                                                                  K 300
account) and check if these invoices should not be booked as tangible fixed assets.
                                                                     ACCURACY OF FIXED ASSETS
=> Validate the depreciation table (tangible fixed assets file).
=> Check for material disposals, and recalculate gain and loss (vouch to entry into system)
                                                                                                                  K 400
=> Check arithmetical calculation.
=> Recompute depreciation for 15 assets on the fixed asset detail.
=> If the site has a major expansion project in progress ask to see
                                                                                                                  K 410
documentation/authorizations/progress report. Budget to Actual comparisions, etc.
=>Check that depreciation methods and periods are in line with the Thomson accounting standards
and procedures (Chapter 5). This chapter will give you:
                                                                                                                  K 420
=> Depreciation rate.
=> Length of depreciation.
                                                        INTANGIBLE FIXED ASSETS
The main objectives are:
=> Existence / Accuracy / Presentation
                                                                                            CROSS-
                                         TASK                                                         DONE BY   REVIEWED BY
                                                                                          REFERENCE
                                                                    GENERAL
=> Compare beginning and ending balances of intangble assets. Explain additions
                                                                                            L 100
and deletions.
=> Review current year amortization vs. prior year amortization.                            L 110
=> Carry out reconciliation between the opening / closing period of the amortization
account (balance sheet) and the dotation / release amounts of the intangible fixed          L 120
assets file.
=> Carry out analytical review of the intangible fixed assets account over the past two
                                                                                            L 130
years.
                                                                   EXISTENCE
=> Select significant additions to intangible assets and vouch existence to supporting
                                                                                            L 200
documentation.
 '=> Note if Company has made acquisition during the year ask to see purchase
                                                                                            L 210
accounting, acquisition agreement, and any calculation of goodwill.
                                                                   ACCURACY
Test the amortization table (intangible fixed assets file).
=> Check arithmetical calculation.                                                          L 300
=> Ck to make sure appropriate lives are being used.
=> For all intangible assets inquire to management if they have performed an
impairment analysis for each intangible asset. Management should be able to support
                                                                                            L 310
value of material intangible assets with future cash flow projections, or other
evidence that supports value of asset.
Check that amortizations are in line with the Thomson accounting standards and
procedures (Chapter 4). This chapter will give you:
                                                                                            L 320
=> Amortization rate.
=> Length of amortization.
                                                                             PAYABLES
The main objectives are:
COMPLETENESS / ACCURACY / PRESENTATION
                                                    TASK                                                            CROSS-    DONE BY   REVIEWED BY
                                                                                                                  REFERENCE
                                                                       INTERNAL CONTROLS
=> Determine who is responsible for vendor set up and that there is sufficient segregation of duties between
the groups responsible for vendor set up and vendor payment?
=> Who reviews payables aging, and who authorizes check runs?
=> Determine who reviews and approves quantities being purchased
=> Ensure that there is sufficient coordination between this location and the sourcing group to obtain the best
pricing and discounts.
=> Ensure that there is a three way match between PO, invoice and receipt. Who performs this match?
=> Are there any local holders of company credit cards?
=> Perform a data sort of this location’s check register in Excel:                                                  N 000
         By dollar amount
         By check #
         By payee
=> Who is required to approve expense reports? Who approves the expense reports of the top three
personnel at this location?
=> Has accounts payable been audited by a third party firm specializing in duplicate and over payments? If
yes, when was it conducted? What were the results of this audit? If no, should this location consider such an
audit?
                                                                               GENERAL
=> Carry out reconciliation between payables ledger / ageing balance / payables trial balance / and the balance
sheet.
=> Intercompany payables: ensure that all intercompany accounts are reconciled. Discuss reconciliation
procedures, and how payables receivables are cleared (cash, offset, etc.).                                          N 100
=> Review fluctuation in the payables account for the current verse the prior period. Review detail of
accounts payable for unusual items (debits, large balances, old balances, payables to individuals or to
members of management, etc.).
                                                                   COMPLETENESS OF PAYABLES
=> Conduct a search for unrecorded liabilities. Obtain the check register for the period subsequent to the
audited date. For all significant payments vouch to invoices / and then make sure these payments were either
properly included or excluded from the AP detail as of the audited date.                                            N 200
=> Obtain the unpaid invoice file for the current period and ensure there are no invoices that need to be
accrued as of our period end.
                                                                      ACCURACY OF PAYABLES
=>Isolate the foreign currency payables and verify their correct assessment at the audited date.                    N 300
                                                                   PRESENTATION OF PAYABLES
=>Through the payables trial balance, determine the debit balances, ask for the reasons of these balances and
if they are significant, assess the necessity to book them in Assets.
                                                                                                                    N 400
=> Review classification of any intercompany payables, ensure segregated from trade payables.
=>Assess the necessity to book significant debits in AP subsystem to Assets.
                                                ACCRUED LIABILITIES
The main objectives are:
COMPLETENESS / ACCURACY/CLASSIFICATION/PRESENTATION (DISCLOSURE)
                                                    TASK                                                             CROSS-    DONE BY   REVIEWED BY
                                                                                                                   REFERENCE
                                                                                  GENERAL
=> Inquire to management of how accruals are identified and recorded during the closing process. Also
inquire as to the process for identification of loss reserves (legal, employee related, warranty). How are these     P 100
loss reserves communicated to upper management for potential disclosure.
=> Analytically review the fluctuation in the accrual accounts between current and prior year. Explain
                                                                                                                     P 110
significant fluctuations.
                                                                      ACCURACY / COMPLETENESS
=> For significant accrual amounts take the ending balance to reconciliation of account. Vouch to supporting
documentation (for example for a payroll accrual vouch to payroll records and by looking at calendar make
sure accrual appears reasonable).                                                                                    P 200
=> If a payment has been made subsequent to our audited date verify accrual amount to cash outlay and
conclude on reasonableness of accrual given information available.
=> Isolate the foreign currency accruals and verify their correct assessment at the closing period. Take
                                                                                                                     P 210
exchange rate used to published source.
                                                                      PRESENTATION OF PAYABLES
=> Review accruals for any significant amounts of debit balances.
                                                                                                                     P 300
=> Inquire how significant loss reserves are communicated for potential disclosure purposes.
                                                                         EQUITY
The main objectives are:
PRESENTATION, CLASSIFICATION, ACCURACY
                                              TASK                                                CROSS-    DONE BY   REVIEWED BY
                                                                                                REFERENCE
                                                                          TESTING
=> Roll equity forward from the prior period. Tie income to income statement. (calculated as:
                                                                                                  T 100
beginning equity plus net income or net loss, plus or minus any other adjustments to equity)
=> Review equity account for any unsusual transactions (ie foreign currency translation
adjustments, other comprehensive income adjustments, etc.) and obtain support for these           T 110
adjustments.

								
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