Running Head: AUDITING OF CASH
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5-2 Final Project Milestone Two: Audit Program
ACC 411
SNHU
August 7,2022
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Auditing of cash is regarded to be a critical process that helps in accurately categorizing
cash elements in the financial statements of an organization. In the case of Robbins Network
Solutions (RNS), the existence of a robust audit program (plan) is essential for evaluating its
internal controls for cash. It can help in ensuring the completeness of the cash-related transactions
of the organization. Both risk assessment and control activities have been integrated into the audit
plan and monitoring and communication aspects.
Control environment
In order to ensure there is proper internal control of cash within RNS, the auditors must
have a thorough insight into the process of managing cash and recording cash-related transactions.
The policies and protocols relating to cash activities must be checked and properly understood.
Additionally, to ensure a robust control environment is in place while understanding the cash
management and recording processes, random testing must be done. For example, while the
financial officer of RNS explains the processes, he must be asked to use a real-life example to show
how internal control over cash accounts is maintained. The accounts reconciliation or bank
statements can be used to explain the current internal control measures in RNS.
Risk assessment
The risk assessment must be done at an integrated level to ensure there is proper internal
control of cash. The chief elements that need to be taken into consideration while assessing cash-
related risks of the organization include the materiality of the balance sheet, segregation of duties,
and cash account reviews. Checking balance sheet materiality is vital to identify any misstatement
in the records. Existing controls to detect fraudulent activities must be examined in detail. While
checking accounts such as accounts receivable, the manner in which roles and duties are segregated
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must be checked. There must be a clear distinction between the person that prepares these accounts
within RNS and the person who reviews them. The reconciliation of cash accounts must be done by
the ones who prepare them so that they can identify any omissions. The frequency of performing
cash account reviews as well as authorized signatories for the accounts must be checked.
Control activities
The existence of well-functional and effective control activities is vital to make sure there is
internal control of cash. In the context of RNS, a broad range of control activities can be carried out
to ensure compliance with Generally Accepted Accounting Principles (GAAP) and identify the
possibility of fraudulent activities. Some of the major control activities that need to be conducted
within the RNS entity are testing the account records, confirmation of cash balances with financial
institutions, and analysis of bank transfers. Similarly, the comparison of cash receipt samples with
the cash receipt journal of the organization is vital to identify poor control over cash transactions.
The presentation of financial statements along with disclosures of RNS’ cash must be evaluated
thoroughly.
Information and communication
Real-time communication of activities is vital to locating cash-related risks. Information
flow must be done in a timely manner, and any major concerns or weaknesses need to be reported to
the respective authority, such as managers or supervisors. Other minor issues or deficiencies must
be addressed by the auditor, and they must be disclosed to the management of RNS. According to
the Sarbanes-Oxley Act (SOX), stringent reporting and security standards must be in place so that
proper control can be ensured. The external auditors must conduct annual or quarterly reviews that
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can help in identifying any cash-related concerns (Sox compliance: A smarter way forward a new
approach can . Deloitte, 2021).
Monitoring
The monitoring of cash transactions of RNS must be done continuously. Innovative
analytical methods can be used during the activity. The management must ensure real-time
monitoring so that cash-related variance or discrepancies can be identified urgently and proper
control measures can be taken.
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References
Sox compliance: A smarter way forward a new approach can . Deloitte. (2021). Retrieved August
6, 2022, from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/us-sox-
compliance-smarter-way-forward.pdf
