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University of The West Indies, Mona Department of Management Studies ACCT 3043 - Auditing I Tutorial Questions 7

The document provides a bank reconciliation worksheet with discrepancies, lists unpresented cheques, and poses four questions related to auditing cash and bank reconciliations. The questions cover preparing a corrected reconciliation, demonstrating audit work, relationships between control risk and test types, the importance of independent bank reconciliations, and differences between bank and accounts receivable confirmations.

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Priscella Llewellyn
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102 views

University of The West Indies, Mona Department of Management Studies ACCT 3043 - Auditing I Tutorial Questions 7

The document provides a bank reconciliation worksheet with discrepancies, lists unpresented cheques, and poses four questions related to auditing cash and bank reconciliations. The questions cover preparing a corrected reconciliation, demonstrating audit work, relationships between control risk and test types, the importance of independent bank reconciliations, and differences between bank and accounts receivable confirmations.

Uploaded by

Priscella Llewellyn
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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University of the West Indies, Mona

Department of Management Studies


ACCT 3043 – Auditing I

TUTORIAL QUESTIONS 7

1. In connection with an audit, you are given the following worksheet:


$’000
Balance on ledger 30 June 2020 35,000
Add: Outstanding deposits 4,300
Dishonoured cheque 1,500
Debit memo 350
41,150
Deduct:
Unpresented Cheques (2,785)
Direct credit (2,100)
Cheques for an account payable entered on books as (500)
$297,000 but drawn and paid by bank as $797,000.
(5,385)
Computed balance 35,765
Unreconciled difference (2,765)
Balance per bank (agreed to confirmation) 33,000

Unpresented Cheque listing


Cheque Number Amount $’000
373 195
474 40
603 455
607 292
611 148
713 738
714 529
916 36
717 117
Total 2,785

Required –
a) Prepare a corrected reconciliation. (12marks)
b) With performance materiality set at $300,000, use appropriate tick marks to demonstrate
audit work performed on the corrected reconciliation. (11 marks)
Please come prepared to show your workings

2. Explain the relationships among the initial assessed control risk, tests of controls and substantive tests
of transactions for cash receipts, and the tests of details of cash balances. (5 marks)

3. Why is the monthly reconciliation of bank accounts by an independent person an important internal
control over cash balances? Which individuals will generally not be considered independent for this
responsibility? (4 marks)

4. How do bank confirmations differ from positive confirmations of accounts receivable? Distinguish
between them in terms of the nature of the information confirmed, the sample size, and the
appropriate action when the confirmation is not returned after the second request. (5 marks)

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