CHURCH NAME INTERNAL AUDIT WORKPAPER BANK BALANCE CONFIRMATION

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CHURCH NAME INTERNAL AUDIT WORKPAPER BANK BALANCE CONFIRMATION Powered By Docstoc
					                                            CHURCH NAME
                                     INTERNAL AUDIT WORKPAPER
                                     BANK BALANCE CONFIRMATION
                                        PROGRAM DESCRPTION
What is a Bank Confirmation?
A Bank Confirmation is an audit procedure performed by an audit committee member when conducting a
financial statement audit. Bank confirmations are used to verify the church's cash account balances. These
are paper forms sent through the mail which must be pre-approved by a signer on the account(s) and
confirmed by bank (3rd party) personnel. If sent by mail, the response could take days or weeks to complete.
Today electronic ones are available for $5.00 per account @ www.auditconfirmations.com
                                    PURPOSE & Professional Standards
The purpose of doing bank confirmation is to verify amounts using third parties as to the existence of
accurate bank balances reported on the church's financial statement or Treasurer's report. Under
professional auditing standards, SAS 70,the confirmation from the bank should be compared to the
Treasurer's bank reconciliation for accuracy and trace the bank balance from the bank reconciliation to the
financial statement.
                            LESSON LEARNED - CASE STUDIES - FRAUD & ABUSE
On Jan 7,2009, the CEO of Satyam Computer Services (SAY) a publicly traded corporation admited that he
hid news that he had inflated the amount of cash on his balance sheet by over $1 Billion. To add further
insult to injury, a Big 4 external CPA firm, Price Waterhouse & Coopers, was the the auditor in charge and
goofed big-time by relying on a audit work done by an Indian affiliate, which in fact was not completed. In a
post-SOX Act era, it remains to be seen if PriceWaterhouse will be fined or disciplined by the new regulatory
board the PCAOB (Public Company Accounting Oversight Board) as any audit conducted under SAS 70
(Statements of Auditing Standards) would have uncovered the error.
www.businessweek/globalbiz/content/Jan 2009/gb2009017_807784.htm
Historically, sometimes bank statements were issued other than at the end of the month and therefore, need
to be verified through bank confirmation. Today technology plays a much larger role in audits, and by
independently verifying the bank balance, risk of fraudulent bank statement documents are reduced.
                                        AUDIT PROCEDURE
Documents required: This Program workpapers
                    Standard Bank confirmation Form
                    Monthly copies of the Financial statements or Treasure's reports
Timing   The bank confirmation program can be done at any monthend or in conjuction with year end.

Tasks
    1      For Bank Confirmation purposes, the Audit Chairperson picks a confirmation date
           (usually the end of the month) which cooresponds to a financial statement report date,
           then proceeds to give the date with the Bank Confirmation Program workpapers to
           the assigned staff member.
    2      The staff auditor reads & reviews the program procedure
           Has the Church Chairman or Treasurer fill-in the appropriate date and signature lines
           Prepares a stamped return envelope "GEFC Audit Committee - Confidential"
           makes a photocopy of the original signed request
           Puts his/her initiail on the return address label and mails it
    3      The bank receives the confirmation and completes and signs it
           Notes any exceptions and returns it in the pre-paid, pre-addressed return envelope
           Review for frequency and efficiency(dates) and the category or requester if provided.
    4      Upon receipt of the confirmation from the bank the audit committee member(ACM)
                       Verifies the envelope was not tampered with
                       Verifies the balance(s) on the bank statement agrees with the confirmation
                       Traces the ending balance on the bank statement to the bank reconciliation
                       Traces the ending balance on the bank reconciliation to the financial statement
    5                  Notes any observations or exceptions, signes the program sheet and
                        returns the workpapers, confirmation and copy to the Audit Chairperson
           Note: If this is a first time for this program, the Chairman/Treasurer might receive a call
from the bank relationship manager to explain the confirmation as normal.
                                     FINDINGS
                                                                                  Agrees?
Return envelope arrives untampered
Bank Confirmation Balance amount agrees with Bank Statement ending balance
Traces the ending balance on the bank statement to the bank reconciliation
Traces the ending balance on the bank reconciliation to the financial statement

                                 Confirmation Log
                                   Intiails    Date                               Audit Doc No
SOP completed by                                        Bank confirmation
Reviewed By                                             Bank confirmation-copy
Final Review by                                         Copy of Financial
                      STANDARD CONFIRMATION FORM
                 TO VERIFY ACCOUNT BALANCE INFORMATION
                       WITH FINANCIAL INSTITUTIONS
Financial Institutions Name and Address                  Customer Name


                                                         Customer Federal Tax Registration ID Number

Dear Financial Institution:

In connection with an internal audit, we have provided to our audit committee with a financial statement as of close of
operations on ________ which includes balances from our accounts, deposits, and/or loans. Please provide the
following information regarding our accounts held at your institution in our organization's name, or under the ID number
listed above. Although we do not expect you to conduct a comprehendsive detailed search of your records, if during the
process of completing this confirmation you encounter additional information, please include such information below.
Finally, please enclosed this information in the envelope provided to return it directly to our committee.



1. At the close of operations _____/_____/2009, our records indicated the following information:
      Account Name               Account Number          Interest Rate            Balance*




2. At the close of operations _____/_____/2009, our records indicate GEFC was directly liable to
the financial institution for loans as follows:
       Account No. &             Next Pmt Interest  Pymt  Description of
        Description                Date      Rate  Amount   Collateral      Balance Due *


3. At the close of operations _____/_____/2009, please provide a list of authorized signers on the
account : (please use a separate sheet if necessary)




Church Chairman or Treasurer's Signature                            Date Signed

The information presented above is accurate to the best of our knowledge, although we have not
conducted a comprehendsive detailed search of our records, no other deposit or loan acounts have
come to our attention except as noted below.


Authorized Signature Financial Institution                          Date Signed


                                     EXCEPTIONS AND / OR COMMENTS




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DOCUMENT INFO
Description: Audit Bank Statement document sample