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substantive procedures over bank balance
Verify the balance per the bank statement to an original bank original year end bank statement and also to the bank confirmation letter.
Verify the reconciliation’s balance per the cash book to the year end cash book.
Examine the bank confirmation letter for details of any security provided by the company or any legal right of set-off as this may require disclosure.in first procedure, bank statement is repeated 2 times. how these 2 are different?
and in 2nd one, what do they mean by ‘reconciliation’s balance per the cash book”?
and in 3rd procedure, i didnt understand “any legal right of set-off “.Although there are routine bank statements received it is universal practice for a bank certificate to be sent directly from the bank to the auditor. You don’t need two reconciliations as the bank information should be the same on both documents.
The balance on the bank statement/certificate is not necessarily the same as the balance in the company’s cash book and financial statements as there might be timing differences. EG an amount paid in on 31/12 might no appear in the bank account until 2/1. The two balances need to be reconciled ie differences acounted for.
As for set-foo, an example is that within a group there might be a right to set off an overdraft in one group company against a cash balance in another.
big sorry,there was a typo error,
verify the balance per bank statement to an original year end bank ststement and also to the bank confirmation letter.
that means they comparing balance of bank statement to year end bank statement, and also compare balance of bank statement to bank confirmation letter.
i am confusing about the matter , they are comparing balnce of 2 types of bank statements.
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