The following audit procedures are concerned with tests of details of general cash and financial instruments balances:
1. Obtain a standard bank confirmation from each bank with which the client does
business.
2. Compare the balance on the bank reconciliation obtained from the client with the
bank confirmation.
3. Trace deposits in transit on the bank reconciliation to the cutoff bank statement and
the current-year cash receipts journal.
4. Compare the bank cancellation date with the date on the cancelled check for checks
dated on or shortly before the balance sheet date.
5. List the check number, payee, and amount of all material checks not returned with
the cutoff bank statement.
6. Review minutes of the board of directors meetings, loan agreements, and bank con-
firmation for interest-bearing deposits, restrictions on the withdrawal of cash, and
compensating balance agreements.
7. Prepare a four-column proof of cash.
8. Compare the price per share on an equity investment at year end according to the
schedule of investment activity to the quoted market price according to an outside
pricing source.
9. Confirm the balance of financial instruments at year end with the broker-dealer ser-
vice organization used by the client to manage its investment portfolio.
Explain the objective of each audit procedure.
