Audit of Cash

What is checked

• Balances on bank accounts — reconciled with confirmations received directly from the bank
• Cash desk transactions and compliance with cash discipline
• Amounts advanced to employees: timely expense reports and justified spending
• Completeness of recording of cash proceeds
• Transactions in the last days of the reporting period — a typical place for misstatements

Why confirmation is requested from the bank

A statement provided by the company itself is weaker evidence than a confirmation the auditor obtains directly from the bank. That is why requests are sent for material accounts, and the replies go to the auditor, bypassing the audited entity.

Employee advances as a risk area

Advances that remain unsettled for a long time are a frequent finding. Besides distorting the books, they have tax consequences: amounts that are neither returned nor supported may be reclassified as the employee's income.

Procedures for cash and bank accounts

• surprise cash count — the auditor is entitled to verify the physical existence of property (Art. 28 of Law ZRU-677 on Audit Activity);
• written bank confirmations of balances and accounts — a right of the auditor (Art. 28);
• cut-off test at the reporting date and reconciliation of statements with the books;
• testing the use of cash registers and issuance of receipts: the fine for trading without a cash register is UZS 5 million, and for an unregistered cash register UZS 7 million (Art. 221 of the Tax Code);
• cash discipline: a breach carries a fine on officials of 15 BCV, base calculation values (Art. 175 of the Code of Administrative Liability).