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
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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 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
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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.
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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
