CHECKLIST FOR CASH AUDIT
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778
Copyright © Daniel Cullinane CPA.
Companies generate cash from a variety of sources. In addition, some companies may utilize a petty cash fund to keep small amounts of cash on hand to use for minor, miscellaneous purchases. Whether or not a company uses an external CPA auditing firm to audit its financial statements and accounting practices, any firm can benefit from conducting internal periodic audits of its cash and cash flows.
Cash includes actual cash kept onsite in a cash drawer or envelope. It includes actual cash maintained in checking, savings or money market accounts. It also recognizes cash equivalents, including monies held in a certificate of deposit, marketable securities and checks and money orders held onsite awaiting deposit. If credit card payments convert to cash within a few days, companies can count those amounts as cash.
Regularly auditing a company's actual cash position can help detect fraud. It can also identify problem areas where a company must enact additional processes and procedures to reduce temptation and minimize the likelihood of embezzlement, theft or fraud. If a company has a petty cash fund, a cash audit must confirm that the amounts in the petty cash fund equal the amount recorded in the general ledger. If not, receipts must exist to account for the monies that were spent but not yet replenished.
Companies must reconcile the beginning and ending balances shown on their bank statements with the amounts shown in their manual or software-based accounting systems. They must record any interest earned or fees charged, investigate any discrepancies and determine the source of each error. The person who reconciles the bank account must differ from the person who writes checks, wires or transfers payments or pays bills electronically.
If customers pay in cash, only specific individuals can be authorized to receive this cash. Those individuals must provide receipts to customers for that cash and retain a duplicate of those receipts for company use. They must record these receipts in the accounting system as soon as possible. Cash bank deposit slips must equal all of the cash receipts.
Companies must confirm that all checks have an associated invoice or purchase order. Product invoices should require the initials of the person who confirmed delivery and receipt of the product. If the company writes scores of checks each month, a random review of the checks will suffice. Companies must retain all voided checks as evidence of voiding.
For retailers who conduct a significant amount of business in cash, companies should locate safes on site. Each person who deposits money into the safe must put her name, date and amount on the cash bundle. Each cashier must close out her register at the end of her shift and count and record the actual cash. Her supervisor must confirm the amount. Retailers must install cameras around the registers and safes.