Running Head: AUDITING OF CASH
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5-2 Final Project Milestone Two: Audit Program
ACC 411
SNHU
AUDITING OF CASH
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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
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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 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
AUDITING OF CASH
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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 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.
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
