Sample interview questions: Can you explain the process of auditing cash and cash equivalents?
Sample answer:
Auditing Cash and Cash Equivalents Process
1. Planning
- Assess inherent and control risks.
- Determine materiality and scope of audit procedures.
- Develop audit plan to test cash transactions, balances, and disclosures.
2. Walkthrough and Observation
- Observe cash handling and recording procedures.
- Identify potential areas of fraud or error.
- Review key controls related to cash, such as segregation of duties and reconciliations.
3. Analytical Procedures
- Compare month-end cash balances to prior periods and expected trends.
- Analyze cash flow statements for unusual patterns.
- Investigate significant fluctuations in cash and cash equivalents.
4. Reconciliations
- Reconcile bank statements to the general ledger.
- Verify cut-off procedures and identify any unrecorded or misstated transactions.
- Reconcile cash equivalents to underlying investments, such as money market accounts and certificates of deposit.
5. Transaction Testing
- Select a sample of cash receipts and disbursements.
- Verify supporting documentation, such as invoices, vendor statements, and deposit slips.<... Read full answer