Question

Assume you are the senior accountant on an audit engagement of a fictitious business, Pine Street Company (PSC). Assume the instructor is the engagement partner. You are to prepare an audit program for PSC. The firm manufactures and sells bicycles. The audit program must be in one of the following areas of the business: accounts receivable and revenues; inventories and costs of goods sold; accounts payable; payroll; or property, plant and equipment. Submit a well written audit program for cash. Remember to cite any sources using the APA format.

Answer 1

Audit program for cash:

• Physical cash verification performed by the management as at the reporting date needs to be obtained and verified by the audit team.
• Suprise cash count should be performed by the audit team during the field-work and balances need to be matched with books as per system. Further, roll back procedures need to be performed to arrive and tie the same to the reporting date balance.
• Petty cash statements needs to be tested using the substantive approach of testing samples obtained by MUS (Monetary unit sampling) approach.
• Cash sales and cash purchase registers need to be obtained and tested as per MUS.