In situations where it is not possible to attend physical verification of cash, such as during the COVID-19 pandemic or other circumstances, auditors can employ alternative procedures to verify the existence and accuracy of cash balances.
To verify cash:
1. Ask for the cash to be deposited in a bank and withdrawn
2. Do a VC verification
3. Evaluate the internal controls
Other procedures include:
1. Bank confirmations: The auditor can request bank confirmations directly from the client’s financial institutions to obtain independent verification of the cash balances held in the bank accounts. This provides assurance regarding the existence and accuracy of the reported cash balances.
2. Review of bank statements and reconciliations: The auditor can review the client’s bank statements, including canceled checks and bank reconciliations, to assess the movement of funds and verify the accuracy of cash transactions.
3. Analytical procedures: The auditor can perform analytical procedures by comparing the cash balances reported in the financial statements with prior periods and industry benchmarks. Any significant fluctuations or anomalies can be further investigated to ensure the accuracy of the reported cash balances.
4. Review of supporting documentation: The auditor can examine supporting documentation such as cash receipts, disbursement records, and bank deposit slips to validate the recorded cash transactions and ensure they are properly documented.
During the COVID-19 pandemic, auditors may need to adapt their procedures to comply with safety measures and travel restrictions. Remote auditing techniques, such as video conferencing, electronic document sharing, and secure online portals, can be utilized to communicate with clients and obtain the necessary information and documentation. The auditor should also consider any specific guidance or regulations issued by relevant professional bodies or regulatory authorities in response to the pandemic to ensure compliance and the safety of all parties involved in the audit process.
