Audit of Evolution Building Supply

(a) Prepare a working paper comparing: (1) the total of all checks returned by the bank or still outsta
at December 31 plus checks issued from January 1-14

Bank Records
Checks paid, as per cutoff statement
Paid/Acknowledged checks:
From December 31 7,200.00
From January 14 16,400.00
Total Checks Paid

Total Checks paid, per bank records

Total Checks issued for disbursement
Difference

WP. CS1
Working Paper for Cutoff Statements and Outstanding Checks
Client: Evolution Builoding Company
December 31, 20x0

Disbursements Per Accounting Records

Date Particulars
12/31 Outstanding Checks- orig. issued for disbursement
1/14 Checks issued for Disbursement
TOTAL Checks issued

Traced from Bank Reconciliation PBC

Data Referrence

Checks Issued and Checks Paid Reconciliation

Date Paticulars
12/31 Outstanding Checks- orig. issued for disbursement
1/14 Checks issued for Disbursement
12/31 From outstanding checks in December 31
1/14 From Outstanding Checks in January
1/14 As per cutoff statement
 TOTAL

Checks issued for disbursements

Checks paid by the Bank
Difference

Possible Situation Action/s Taken

The client may have recorded some of its Examine the disbursements and check
disbursements in wrong amounts or have recorded were just error or related to fraud.
some items that should not be recorded under
disbursements

> The bank might made an erroneous charging of the

client's account
Examine the items in the cutoff stateme
were possible erroneous charging made
be any, notify the bank regarding the er
adjustment on the client's account
>
The client may have not recorded some checks issued Examine if there are any unrecorded ch
adjust the cash disbursement records, i

The bank might had charged the client because it failed Examine the items in the cutoff stateme
to notice the cancellation of check/ payment of the client were possible erroneous charging made
be any, notify the bank regarding the er
adjustment on the client's account

>

>
s returned by the bank or still outstanding (2) total per client's record of check outstanding

Client's Per Accounting Records

100,880.00 Checks Outstanding
December 31
Checks issued in January
23,600.00 Total Checks issued for disbursement
124,480.00

124,480.00
(104,480.00)
20,000.00 Why?

Checks Paid Per Bank Records

Amount Balance Date Particulars
41,516.00 41,516.00 12/31 From outstanding checks in December 31
62,964.00 104,480.00 1/14 From Outstanding Checks in January
104,480.00 104,480.00 1/14 As per cutoff statement
TOTAL Checks Acknowledged/Paid

Traced from Cutoff Statement

Data Referrence

Amount Auditor's Note: WP.CS1 or Working paper for Cutoff

Difference Building Company should show the findings in audit pr
Per Client Per bank
for the reporitng year December 31, 20x0. Data presen
41,516.00 41,516.00 from the cutoff statement and Bank
62,964.00 62,964.00
7,200.00 (7,200.00)
16,400.00 (16,400.00)
100,880.00 (100,880.00)
 104,480.00 124,480.00 (20,000.00)

cks issued for disbursements 104,480.00

cks paid by the Bank (124,480.00)
(20,000.00)

Action/s Taken Adjusting Entry

mine the disbursements and check if the errors made
e just error or related to fraud.
N/A

N/A
mine the items in the cutoff statement and check if there
e possible erroneous charging made by the bank, if there
any, notify the bank regarding the error and request for an
stment on the client's account

mine if there are any unrecorded checks and according

st the cash disbursement records, if there be any.

N/A

mine the items in the cutoff statement and check if there

e possible erroneous charging made by the bank, if there
any, notify the bank regarding the error and request for an
stment on the client's account

N/A
 41,516.00
62,964.00
104,480.00

Particulars Amount Balance

hecks in December 31 7,200.00 7,200.00
Checks in January 16,400.00 23,600.00
100,880.00 124,480.00
124,480.00 124,480.00

Statement

WP.CS1 or Working paper for Cutoff Statements and Outstanding checks for Evolution
y should show the findings in audit procedures done to test the Cash account of the client
ear December 31, 20x0. Data presented in Disbursements and Checks paid were traced
from the cutoff statement and Bank reconciliation provided by client.
WP.BR01
Bank Reconciliation

GENERAL COMPANY
Bank Reconciliation
1st national Bank of US Bank Account
September 30, 20x5

Balance per Bank

Deposits in Transit
9/29/x5
9/30/x5

Outstanding Checks
Date Chk No.
8/31/x5 #988
9/26/x5 #1281
9/27/x5 #1285
9/29/x5 #1289
9/30/x5 #1292

Customer Nore collected by bank

Book Error
Date Chk No,
9/26/x5 #1282

Balance Per Books

 a
28,375.00 a

4,500.00
1,525.00 6,025.00 b b
34,400.00

2,200.00
675.00
850.00 c
2,500.00
7,225.00 (13,450.00) c
20,950.00
(3,000.00) d

Particulars d
Check written for 270 was erronenously 450.00 e
charged by bank as 720; bank was e
notified on 10/2/x5
18,400.00 f
f
Confirm directly to the bank
Trace items on the bank reconciliation to cutoff statement

Ascertain reason for unusual delay

trace to cash receipts journal
Inspect supporting for reconciling item not appearing on cutoff statement
Trace items on the bank reconciliation to cutoff statement
Trace items on the cutoff statement to bank reconciliation

trace to cash disbursements journal

Ascertain reason for unusual delay
Inspect supporting for reconciling item not appearing on cutoff statement
Trace items on the bank reconciliation to cutoff statement
Trace items on the cutoff statement to bank reconciliation

Inspect Bank credit memo

Inspect Bank credit memo

Trace items on the bank reconciliation to cutoff statement

Compare to 9/30/x5 general ledger

 Substantive Procedures
a) Prepare a bank transfer schedule >
b) Prepare a four-column proof of cash >

c) Use a standard confirmation form to confirm account balance

information >

d) Obtain cutoff statements >

e) Search for large checks to directors, officers and employees >

 Primary Objective
Detect Kiting
Reconcile cash receipt and disbursement totals between company
records and bank records

Veify year-end cash and liability balance information

Verify reconciling items on the year-end reconciliation

Identify related party transactions

Reliabile Auto Parts, Inc.
Proof of Cash for April 20x0
July 31, 20x0

Balance
3/31/x0
Per Bank Statement 71,682.84
Deposits in Transit
@3/31/x0 2,118.18
@4/30/x0
Outstanding Checks:
@3/31/x0 (14,888.16)
@4/30/x0
Bank Service Charges
@March 20x0 22.18
@April 20x0
Credit Memo: Note Receivable
@40/30x0
NSF Check 418.19

59,353.23
Deposits Checks Balance
4/30/x0
61,488.19 68,119.40 65,051.63

(2,118.18)
4,918.16 4,918.16

(14,888.16)
22,914.70 (22,914.70)

22.18
(19.14) (19.14)

(18,180.00) (18,180.00)
(418.19)

45,689.98 76,148.98 28,855.95