Substantive procedures for bank reconciliation

Hhoishan6y ago

Hi Sir, Hope you are having a lovely day. I am struggled with the terminology of per year end and post year end in auditing. Here is one of the sample in practice answer related to 'Substantive procedures for bank reconciliation' which I do not quite understanding the timing of it. ''Trace all the outstanding lodgements to the pre year end cash book and post year end bank statement and also to paying-in book pre year end.'' Firm's year end was 31 Mar 20X5 Therefore, pre year end means between 1 Apr 20X4 to 31 Mar 20X5 and post year end would be after 31 Mar 20X5, am I right? Thank you very much with your time.

KimTutor6y ago#1

Pre- means before and post- means after - so before and after the year end of 31 March 20X5. It will help to understand what is a bank reconciliation and what is meant by "outstanding lodgements". This is assumed knowledge of FA (F3). Outstanding lodgements are a reconciling item due to timing difference - they should represent money that has been deposited with the bank shortly before the year end - i.e. in the few days of March - which are recorded on the bank statement on or after the 1st of April. We are concerned with establishing a correct cut-off on the recording of cash receipts at the year end ONLY (it is not about transactions throughout the entire year from 1 April 20X4 to 31 March 20X5).

Hhoishan6y ago#2

Thank you for your prompt reply. I understood now thank you very much. May I ask what would be the strategy for listing substantive procedures since there are a variety of areas such as trade payables & receivables, bank balances, PPE & inventory and so on? I tried to memorise as much as I can in order to pick the appropriate one that tailor to the question however my score was not well enough. Thank you a lot.

KimTutor6y ago#3

Please see my advice on this post https://opentuition.com/topic/help-74/ Better to UNDERSTAND assertions and procedures and be able to think up appropriate procedures on the day rather than try to memorise - believe me (!)