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There are some substantive procedures for bank balances that i find hard to understand as follow for a problems on march/june 2017 exam:
1. Agree the reconciliation balance per the cashbook to the year-end cash book
I donot understand the meaning of this substantive procedure, as there is only one cashbook and this substantive procedure means that there are a number of cashbooks
2.For all bank accounts, obtain the company’s bank account reconciliation and cast to ensure arithmetical accuracy.
I donot understand the meaning of cast in this substantive procedure and why “cast” can ensure arithmetical accuracy?
Please explain me more about that
Thanks!And one more questioned substantive procedure:
3. Agree all “accounts” listed on the bank confirmation letter to the company’s bank reconciliations and the trial balance to ensure completeness of bank balances
I want to ask whether “accounts” means the bank account balances, as word “account” have various meanings
Thankyou!I suggest you refer to the following in the AA Study Hub:
In Chapter 9: Activity 1 Reconciliations – the solution explains what it is that is reconciled.
To “visualise” this see:
In Chapter 26 – s.2.2.1 the “Pro Forma Reconcilation”A reconcilation is a schedule/working paper (prepared by the client) – the auditor will need to agree the balances and all the items that make up the reconcilation to supporting evidence.
So, for example, the “balance per the cash book/cash account” per the schedule must actually agree to the cash book balance and cash account balance in the genernal ledger.
“Cast” just means “add up” or “sum”.
A bank confirmation letter is prepared by the bank – the account(s) referred to will be the bank’s accounts in the name of the audit client. A client might have a “current a/c” (that earns no interest) and a “deposit a/c” (that earns some interest) – or a separate overdraft a/c.
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