Question

While performing the test on client’s bank reconciliation, auditor should also recognize the cancelled cheques. Determine two (2) audit procedures that can be carried out on cancelled cheques

Answer 1

Cancelled checks can be audited by following procedures:

• Check if the client maintains proper records for cancelled checks. Verify segregation of those who write the checks and those who maintain these records.
• Ask for the cancelled checks and match them with the register
• Inquire reasons why the checks were subjects to cancellation.
• Verify if cancellation was authorised.
• If check cancelled due to any error, check if subsequent checks substituting the original is made.