RWAMAGANA CAMPUS

DEPARTMENT: ACCOUNTING

FACULTY: ESM

COURSE: AUDITING AND ASSURANCE

GROUP 6 ASSIGNMENT

ASSIGNMENT III

REGISTRATION NUMBERS:

1.19125/2022

2.18155/2021

3.19797/2022

4.17892/2021

5.14517/2018

6. 18642/2021

LECTURER: CPA BAVUGAMENSHI Jean Damascene

Topic: Discuss Review considerations in Audit Reporting, after elaborate technical and

procedure use in auditing cash book.

Date: 12th May, 2024

Question: Discuss Review considerations in Audit Reporting, after elaborate technical and
procedure use in auditing cash book.
Review considerations
An auditor must perform and document an overall review of the financial statements before
making an audit opinion. This review, along with the conclusions drawn from other audit
evidence obtained, gives the auditor a reasonable basis for his opinion on the financial
statements. It needs to be carried out by a senior member of the audit team, who has the
appropriate skills and experience.
Review Considerations in Audit
1. Understanding the Intended Users and Their Needs:
The primary audience for audit reports includes shareholders, investors, creditors, and regulatory
bodies. Each group possesses distinct information needs and expectations. Auditors must tailor
their reports to address these specific needs, providing relevant information and insights that
facilitate informed decision-making. For instance, investors may prioritize information on the
company's financial performance and risks, while creditors might focus on the entity's ability to
meet its financial obligations.
2. Clarity and Conciseness:
The audit report should be written in clear, concise, and unambiguous language. Technical
jargon and overly complex sentence structures should be avoided. The report should present the
essential findings and conclusions in a readily understandable manner, enabling users to grasp
the key points without requiring extensive accounting expertise.
3. Completeness of Information:
The report must contain all the necessary information to support the auditor's opinion. This
includes details of the scope of the audit, the basis for the opinion, and any significant findings or
adjustments identified during the audit process. Omitting crucial information can undermine the
report's credibility and usefulness.
4. Addressing Significant Risks and Uncertainties:
Auditors have a responsibility to identify and assess significant risks and uncertainties that could
materially affect the financial statements. The report should clearly articulate these risks and
uncertainties, along with the auditor's assessment of their potential impact. This information is
essential for users to understand the limitations of the financial statements and make informed
decisions.
5. Emphasis of Matter Paragraphs:
When circumstances warrant, the auditor may include emphasis of matter paragraphs in the
report. These paragraphs highlight specific matters that, while not affecting the auditor's opinion,
require additional attention from users. Examples include uncertainties related to ongoing
litigation or the entity's ability to continue as a going concern.
6. Consistency and Comparability:
To facilitate meaningful comparisons across periods and entities, audit reports should maintain
consistency in format and terminology. This allows users to readily identify changes in the
financial statements and assess trends over time.
7. Professional Judgment and Skepticism:
Throughout the review process, auditors must exercise professional judgment and maintain a
healthy level of skepticism. This involves critically evaluating the evidence gathered during the
audit and questioning any unusual or unexpected findings. A thorough and skeptical approach
ensures that the report accurately reflects the true state of the financial statements.
8. Communication with Management:
Auditors should maintain open communication with management throughout the review process.
This facilitates the clarification of any uncertainties and ensures that management understands
the auditor's findings and conclusions. Additionally, it allows management to address any
concerns or provide additional information that may be relevant to the audit report.
9. Legal and Regulatory Requirements:
Auditors must comply with all applicable legal and regulatory requirements when preparing their
reports. These requirements may vary depending on the jurisdiction and the specific type of audit
being conducted. Failure to comply with these requirements can have serious consequences for
the auditor and the audit firm.
10. Continuous Improvement:
Auditors should continuously strive to improve the quality and effectiveness of their reports.
This involves staying abreast of new developments in accounting standards, auditing practices,
and user needs. By adopting a forward-looking approach, auditors can ensure that their reports
remain relevant and valuable to their intended users.
Elaborate Technical and Procedural Use in Auditing Cash Book

The cash book is a fundamental financial record for any organization, as it tracks all cash
receipts and disbursements. Auditing the cash book is crucial to ensuring the accuracy and
integrity of financial reporting. This essay will delve into the elaborate technical and procedural
aspects of auditing the cash book, providing a comprehensive understanding of the process.

Technical Aspects

1. Analytical Procedures:

 Trend analysis: Examining trends in cash receipts and disbursements over time to
identify any unusual fluctuations.
 Ratio analysis: Comparing key ratios such as cash turnover ratio and cash conversion
cycle to industry benchmarks and historical data.
 Benchmarking: Comparing the organization's cash management practices to industry
best practices.

2. Data Analytics:

 Data mining: Utilizing data mining techniques to identify patterns and anomalies in cash
transactions.
 Predictive modeling: Developing predictive models to forecast future cash flows and
identify potential risks.
 Visualization tools: Employing data visualization tools to present complex data in an
easily understandable format.

3. Continuous Auditing:
  Real-time monitoring: Implementing real-time monitoring systems to track cash
transactions as they occur.
 Automated exception reporting: Setting up automated exception reporting systems to
flag suspicious transactions for further investigation.
 Continuous reconciliation: Performing continuous reconciliation of cash balances with
bank statements and other supporting documentation.

Procedural Aspects

1. Planning and Risk Assessment:

 Understanding the business: Gaining a thorough understanding of the organization's

business model, industry, and cash management practices.
 Identifying risks: Assessing the inherent risks associated with cash transactions, such as
theft, fraud, and errors.
 Developing an audit plan: Tailoring the audit plan to address the identified risks and
ensure a comprehensive review of the cash book.

2. Internal Control Evaluation:

 Evaluating internal controls: Assessing the design and operating effectiveness of

internal controls over cash receipts, disbursements, and custody.
 Testing controls: Performing tests of controls to determine whether they are operating as
intended.
 Identifying control weaknesses: Identifying any weaknesses in internal controls that
could lead to errors or fraud.

3. Substantive Procedures:

 Vouching: Tracing a sample of cash transactions to supporting documentation, such as

invoices, receipts, and bank statements.
  Reconciliation: Reconciling the cash book balance with the bank statement and other
relevant records.
 Confirmation: Sending confirmation requests to third parties to verify the accuracy of
recorded cash transactions.

4. Reporting and Communication:

 Documenting findings: Documenting all audit findings, including identified risks,

control weaknesses, and potential misstatements.
 Communicating results: Communicating audit results to management and those charged
with governance, including recommendations for improvement.
 Following up on recommendations: Monitoring the implementation of audit
recommendations to ensure that identified issues are addressed.