Management assertion is a set of information that the management provided it to the auditor, so the auditor will make sure there are no material misstatements. According to AU 326, paragraph 3, management assertions can be either explicit or implicit and can be classified according to three categories: Assertions about transactions, assertions about accounts balance, and assertions about presentation and disclosure. The auditor has to keep in mind that the cash is a liquid assets and risky by nature more than other assets. For that, the primary concern to an auditor with regard to cash are as follows, *Existence is the most concern to the auditors, according to AU 326, paragraph 4, assertions about existence address whether assets or liabilities of the entity exist at a given date and whether recorded transactions have occurred during a given period. *Completeness: According to AU 326, paragraph 4, assertions about completeness address whether all transactions and accounts that should be presented in the financial statements are so included. *Rights and obligation is one of the account balance assertions According to AU 326, paragraph 6, assertions about rights and obligations address whether assets are the rights of the entity and liabilities are the obligations of the entity at a given date. * Presentation and disclosure, according to aU 326, paragraph 8, address whether particular components of the financial statements are properly classified, described, and disclosed.
Some of the audit procedures that should be applied to cash funds maintained by a client on its business premises are as follows, * The auditors has to ask management about any cash requirements. * Perform analytical procedures to test the reasonableness of cash balance. * Obtain a bank cutoff statement directly from the bank.
* Prepare a schedule of bank transfers showing all transfers between the client’s bank accounts during the last...