6.52 Procedures for Auditing a Client’s Bank Reconciliation. Auditors typically will find the items.

6.52 Procedures for Auditing a Client’s Bank Reconciliation.
Auditors typically will find the items lettered (A)—(F) in client-prepared bank
reconciliation.
GENERAL COMPANYBank Reconciliation: 1stNational BankSeptember 30

(A)
Balance per bank

$28,375

(B)
Deposits in transit

Sept 29

$ 4,500

Sept 30

1,525

6,025

34,400

(C)
Outstanding checks:

988 Aug 31

$ 2,200

1281 Sept 26

675

1285 Sept 27

850

1289 Sept 29

2,500

1292 Sept 30

7,255

(11,450)

20,950

(D) Customer
note collected by the bank:

(3,000)

(E) Error:
Check #1282, written on Sept. 26 for $270, was erroneously charged by bank as
$720; bank was notified Oct. 2

450

(F)
Balance per books

$20,400

Required:
Assume these facts: On
October 11, the auditor received a cutoff bank statement dated October 7. The
September 30 deposit in transit; the outstanding checks 1281, 1285, 1289, and
1292; and the correction of the bank error regarding check 1282 appeared on the
cutoff bank statement.a.
For each of the preceding lettered items (A)—(F), select one or more of the
following pro­cedures 1-10 that you believe the auditor should perform to
obtain evidence about the item. These procedures may be selected once, more
than once, or not at all. Be prepared to explain the reasons for your choices.1.Trace to cash receipts journal.2.Trace to cash disbursements journal.3.
Compare
to the September 30 general ledger.4.Confirm directly with the bank.5.Inspect bank credit memo.6.
Inspect
bank debit memo.7.Ascertain reason for unusual delay, if any.8.Inspect supporting documents for reconciling items that do not
appear on the cutoff bank statement.9.
Trace
items on the bank reconciliation to the cutoff bank statement.10.
Trace
items on the cutoff bank statement to the bank reconciliation.

b.
Auditors ordinarily foot client-prepared bank reconciliation. If the auditors
had per­formed this recalculation on the preceding bank reconciliation, what
might they have found? Be prepared to discuss any findings.(AICPA adapted)

 

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