C.

Cash, including bank balances

Executable Substantive Procedures RELEVANT ASSERTIONS
B/S P/L
Files (Information to be obtained/evidence
Audit Procedures Ref. Description Detailed Work Steps E V C R&O P&D O M C P&D
to be gathered)

Lead Schedule
1 Prepare a lead C Prepare a lead schedule of cash on 1) Prepare a lead schedule of sufficient detail to enable us to understand the composition of the account balance and reconcile it with financial Cash subsidiary ledger
hand and in banks. statements. X X X X
schedule

Primary Substantive Procedures

1 Bank C01 (PSP) Obtain a complete list of Stage 1: Preliminary Planning
bank accounts (debit and credit • Obtain an understanding of the substance of the entity’s arrangements and transactions with its banks in order to determine the appropriate information
confirmations balances) was obtained. Obtain at to design our substantive procedures and include on our confirmation requests.
a minimum, confirmations of bank • Discuss with the entity, appropriate aspects of the planned confirmation procedures, such as the timing and information required from the entity, prior X X X X
balances were obtained for all to performing the confirmation and before the date that the account balances are to be confirmed.
major depository and
disbursement accounts, and bank
accounts closed during the period Stage 2: (a) Selecting Appropriate Items for Confirmation Complete population/list of bank accounts
and other accounts for • Perform audit procedures to obtain evidence that the relevant population from which the sample items are drawn is complete.
confirmation as appropriate, based a) Obtain a complete list of bank accounts (debit and credit balances).
on the nature of the accounts (e.g., b) Obtain confirmation of bank balances that exceeds established testing threshold. At a minimum, obtain confirmations of bank balances for all major
we may decide not to confirm depository and disbursement accounts, and bank accounts closed during the period.
some imprest bank accounts, pass- c) Select other accounts for confirmation as appropriate, based on the nature of the accounts (e.g., we may decide not to confirm some imprest bank
through bank accounts, or non- accounts, pass-through bank accounts, or non-operating bank accounts with limited activity) to confirm the relationship with the bank including
operating bank accounts with contingencies, liens, pledges, restrictions on the entity’s assets, guaranteed amounts, etc.
limited activity) in order to d) Document in the workpapers the rationale for the selection of bank accounts for confirmation.
confirm the relationship with the
bank including contingencies,
liens, pledges, restrictions on the
entity’s assets, guaranteed
amounts etc. The rationale for the
selection of bank accounts for Stage 2: (b) Preparing and Controlling Confirmation Request Bank Confirmation Request signed by the management
confirmation is documented in the • Check that the recipient is the appropriate confirming party, and the confirmation request is signed by appropriate management personnel to authorize
work papers. the recipient to provide us with the information requested.
• Check any other details on the confirmation request and re-confirm them with the entity.

Refer to the attached sample Bank Confirmation template.

Bank
Stage 2: (c) Preparing and Controlling Confirmation Request - Electronic Confirmation Bank Confirmation Request signed by the management
Confirmation.docx
For electronic confirmations, validate the bank’s email address or fax number. Sample validation procedures include: with assigned EY Code
(a) Call the recipient once details are obtained from the Company to validate the accuracy of contact information.
(b) Agree the individual’s role and responsibilities within the organization.
(c) Agree the individual’s email address/fax number to the recipient’s letterhead, business card.
(d) Agree the domain of the email address to the bank’s domain based on the bank’s letterhead, business card, website, website certificate, or other
reliable identifying source.
(e) Agree the fax number to the physical address belonging to the recipient or the recipient’s organization through an internet-based reverse contact
number search or related tool.

• Check SGV’s address, email address and fax number indicated on the confirmation request to ensure that the return information is correctly stated (use
the SGV reply envelope where available).
• Once the authorized confirmation request is obtained from the entity and is in our control, we assign an SGV code to each confirmation request. The
code may be manually handwritten, or affixed as stickers/labels.

The code is affixed ONLY AFTER the entity has handed-over the confirmation to us and is NOT MADE KNOWN to the entity, hence
maintaining our control over the confirmation process.

Stage 2: (d) Sending Confirmation Request

• The dispatch of the confirmations should be under the control of SGV personnel.
(a) Do not use the entity’s mailing room.
(b) SGV staff must maintain physical control - mailed in SGV office or taken to post office/post box by SGV staff.
(c) Confirmation request not mailed by the end of the day should be kept in SGV Personnel’s custody or controlled in an equally effective manner.
(d) If electronic confirmation request is used, the paper confirmation with the assigned SGV code should be scanned, attached and sent via email (from
an SGV mail account) or fax (which may be from the entity’s fax machine or an SGV office) to the designated respondent. We do not copy(cc) the entity
or any other individual on the distribution of the electronic confirmation with the unique code.
(e) For e-mail, we include content in the subject of the e-mail to distinguish the message and in the body of the e-mail to clearly identify the purpose of
the communication to the respondent. We communicate the following to the recipient in the e-mail:
• They must quote the SGV code in their response.
• They can reply by either e-mail or fax.
• If reply by e-mail, please ensure they reply with history and attachment.
• If reply by fax, please printout and sign on the confirmation.
(f) For fax, we use an SGV cover sheet (the entity’s cover sheet should not be used). The cover sheet should include content to identify the purpose of
the communication to the respondent. We communicate the following to the recipient on the cover sheet: (see the example below)
• They must quote the SGV code in their response.
• They can reply by either e-mail or fax.
• If reply by e-mail, please ensure they reply with the SGV code.
• If reply by fax, please printout and sign on the confirmation
 Files (Information to be obtained/evidence
Audit Procedures Ref. Description Detailed Work Steps E V C R&O P&D O M C P&D
to be gathered)
Stage 3: (a) Receiving and Evaluating the Confirmation Replies Received Confirmation Replies
• Confirmation replies are generally provided to us directly by the banks. They should always quote our SGV code, which we agree from the
confirmation reply to the confirmation control log to validate the authenticity of the confirmation.
We do not use the entity’s fax machine to receive responses. We use an SGV fax and SGV email account under our control.
• For confirmation replies, check the postmark to ensure that it is consistent with address of the bank. If not, investigate and document the reasons.
• We review the signature on the confirmation reply to see if it is consistent with the sender and that the position of the signatory makes sense.
• Ensure to include the confirmation reply envelopes in your files.

Guidance Received Confirmation Replies

• For guidance dealing with the following circumstances, refer to GAMxpress Issue #28 (GAAIT Doc ID: GAMxpress_28_RTM) as attached:
a) If we send the confirmation through a postal service and receive the reply by fax/email
b) If we receive a confirmation response that does not quote the SGV code.
c) If we send confirmation requests by fax but receive the reply by email
d) If we receive a response (by fax or email) to an electronic confirmation request with our reference number but no signed confirmation is attached

• In rare circumstances, if we are given confirmation replies from the entity, (e.g., if the respondent incorrectly addressed the reply to the entity), we
must call the sender at their work location number to verify the source of the confirmation. We also request the respondent to reply in writing directly to
us.

Stage 3: (b) Receiving and Evaluating the Confirmation Replies Received Confirmation Replies
• If we identify factors that raise doubts about the reliability of responses received, we obtain further evidence to address these doubts.
GAMxpress_gaait-
If we determine that a response to a confirmation is not reliable, we evaluate the implications on our CRA, the risk of material misstatement due to fraud
and the aa.ey.pdf
nature, timing and extent of our audit procedures.
• If confirmation replies are returned undelivered, we investigate the reasons for the non-delivery. Where applicable, we resend confirmation request to
the correct address. But where the correct address cannot be determined (or the reasons for non-delivery are otherwise unsatisfactory), we consider the
validity of the account balance and perform alternative procedures.

Stage 3: (c) Receiving and Evaluating the Confirmation Replies Received Confirmation Replies
• Second requests are normally sent to banks who do not reply after a reasonable time. If replies to the second requests are not received, contact major
banks by telephone to understand their reasons for not replying.
• The follow up of non-replies and explanations should also be documented.
• We exercise professional skepticism when dealing with unusual or unexpected responses to confirmation requests or a non-response when a response
would be expected. These circumstances may indicate previously unidentified risks of material misstatement due to fraud.

Stage 3: (d) Investigating Differences Reported in Confirmation Replies Received Confirmation Replies and Differences
• We evaluate every confirmation reply and investigate exceptions to determine whether they indicate misstatements/potential misstatements (e.g. fraud, reported
internal control deficiency) or do not represent misstatements (e.g. differences due to timing or measurement).
• We report all differences to management, regardless of apparent importance.
• Confirmation exceptions may be given to the entity for investigation after we establish control by making a copy or other record of the reply. If entity
personnel are used to investigate exceptions, we inspect, at least on a test basis, evidence explaining and reconciling the exceptions (with reference to
risk considerations and testing threshold).
• We consider whether unreconciled differences represent errors, and evaluate any errors, including, if applicable, projecting those found in a
representative sample. When we find significant or numerous differences, we consider the implications to our risk assessments. We also
consider the effect on the nature, timing and extent of any further audit procedures, for example, whether to extend the scope of our
confirmation procedures by sending further confirmations.

Stage 3: (e) Performing Alternative Procedures Bank passbooks, statements and certificates (for
• It is highly encouraged that we should always strive to receive 100% confirmation directly from banks before the audit report date. selected savings, demand and time deposits
• When we do not receive replies to positive confirmation requests, we apply alternative procedures to the non-responses to obtain evidence necessary to
reduce audit risk to an acceptably low level. We trace amounts and other information on the following;
a.) Bank passbooks, statements and certificates (for selected savings, demand and time deposits.
b.) Other documents supporting the temporary cash investments.
c.) Promisory notes and/or loan agreements (for selected notes and loans payable and long-term debt).
• We apply our alternative procedures to each item that make up the entire balance that we have not received confirmations for.

Stage 3: (f) Summarizing the Results and Conclusions

• The confirmation procedures should be documented in the workpapers. The documentation should include but is not limited to the following:
(a) Coverage obtained through confirmation of key items.
(b) A description of how the representative samples were selected.
(c) Validation procedures performed on the postal addresses, email addresses, domains or fax numbers
(d) Summary and conclusion on the results of confirmation work and alternative procedures performed.
• Engagement teams should ensure that all confirmations replies are received and/or alternative procedures are performed prior to the issuance of the
audit report.
• We evaluate the combined evidence provided by the confirmations and the alternative procedures performed to determine whether they are sufficient to
achieve our audit objectives and if it is relevant and reliable.
• If the combined evidence provided by the confirmations, alternative procedures, and other procedures is not sufficient, we request additional
confirmations or perform other tests, such as tests of details or analytical procedures, to the extent needed to obtain the desired audit assurance.
 Files (Information to be obtained/evidence
Audit Procedures Ref. Description Detailed Work Steps E V C R&O P&D O M C P&D
to be gathered)
Stage 4: Confirmation Replies received after the Date of Our Auditors’ Report Confirmation Replies received after the Date of Our
• When we received confirmation replies after the auditors’ report date and prior to archiving, we perform the following steps: Auditors’ Report
a) Evaluate confirmation replies and investigate differences;
b) Document
• The date the information was added and reviewed;
• The name of the person who prepared and reviewed the additional information;
• The circumstances encountered and the reasons for adding the information;
• The new and additional procedures performed, audit evidence obtained and conclusions reached;
• The effect on our audit opinion; and
• The date of the approval of the change by the partner in charge of the engagement.
c) Include the above information in the documentation that has been added or in a summary log that can be easily reviewed and approved by the partner
in charge of the engagement;
d) Consult and obtain Local Market PPD’s approval if we perform new and additional procedures, or that lead us to reach new conclusions. We
document
• The circumstances encountered;
• The new and additional procedures performed, audit evidence obtained and conclusions reached;
• When and by whom the resulting changes to the engagement documentation were made, and (where applicable) reviewed; and
e) Do not discard any related documentation that previously existed.

Stage 4: Confirmation Replies received after the Documentation Completion Date Confirmation Replies received after the Documentation
• When we received confirmation replies after the documentation completion date, we perform the following: Completion Date.
a) Evaluate confirmation replies and investigate differences;
b) Document
• When and by whom the changes were made and reviewed;
• The specific reasons for making the changes; and
• The effect, if any, on our conclusions.
c) File the confirmation replies and documentation of the above information in separate sections of the hard copy file and dated contemporaneously;
d) Any documentation added is done in hardcopy;
e) Obtain Sub-Area PPD’s approval; and
f) Do not discard any related documentation that preciously existed.

2 Bank C02 (PSP) Examine entity’s bank 1) For all bank accounts selected for confirmation, examine the entity’s bank reconciliations as of period end, including cash-in-transit accounts, (e.g., in 1. Bank reconciliations
reconciliations as of period-end, subledgers) to verify the proper reconciliation of bank statements and general ledger accounts. 2. Bank statements
reconciliations including cash-in-transit accounts • Determine whether the bank balance agrees with the confirmation. 3. Supporting documents and explanations on
(e.g., in sub-ledgers), were • Determine whether the book balance agrees with the lead schedule. significant reconciling items
examined in order to verify the • Test the clerical accuracy of the reconciliation.
proper reconciliation of bank
statements and general ledger
accounts. Unusual items were 2) Investigate any unusual items and test other reconciling items based on the established testing threshold. The threshold and size of the samples
investigated and other reconciling depend on our combined risk assessment.
items were tested based on the
established testing threshold.
3) When appropriate (e.g., to determine whether receipts or disbursements are recorded on a timely basis, or to verify the appropriateness of reconciling
items), obtain cutoff bank statements.
• For deposit in transit, determine bonafide nature of by checking if these were deposited the next banking day by tracing to subsequent bank X X X
statement. Check that none of the deposit in transit items was subsequently returned by the bank. If there is any returned check, determine if it was an
actual collection by tracing details to covering official receipt and to subsequent debit memo issued. For deposit in transit that was not deposited in the
next banking date, investigate the reason and perform additional procedures, if necessary.
• Select large paid checks and debit memos evidencing bank transfers appearing in the subsequent month's bank statement and trace entries in cash
disbursements book to determine accounting period these were recorded. Identify which of these items were recorded on or before the statement of
financial position date and check to see that each appear on the reconciliation as a reconciling item.

3 Cash cutoff C03 (PSP) Test cutoff of cash receipts 1) Identify all interbank transfers at the period-end. 1. Bank reconciliations
and cash disbursements for 2. Bank statements
transfers between different bank 2) Examine the cash entries posted before and after the period end and pay particular attention to cash movements to interbank accounts pre and post 3. Support and explanation on significant reconciling
accounts at the balance sheet date period end. Select items greater than [amount] or ____ % of TE (or exceeding the established testing threshold) and examine the corresponding bank items
was tested. statement to determine whether amounts are recorded in the correct period.
X X
3) Investigate any differences or unusual transfers.

4) When substantive procedures are performed at an interim date, repeat tests above at the period-end, and compare the amount and types of items
between the interim date and the period-end.

Other Substantive Procedures

1 Analytics C04 Perform analytical procedures - 1) Compare the listing of cash accounts with those of prior periods and investigate any unexpected changes (e.g., credit balances, unusual large balances, 1. General ledgers and subsidiary ledgers of current and
Cash on hand and in banks new accounts, closed accounts) or the absence of expected changes. previous years X X X X
2. Supporting documents and explanations for any
2) Review interest received and/or paid in relation to the average cash balances and/or bank overdrafts. unexpected changes or absense of expected changes
noted
3. Details of interest received and average cash
balances per product

2 Cash valuation C05 Test appropriate valuation of cash 1) Obtain the outstanding amount of cash and cash equivalents in foreign currency and reperform the foreign exchange translation. 1. Breakdown of cash and cash equivalents
and cash equivalents (including denominated in foreign currency
overdrafts) denominated in foreign 2. Exchange rates used in translating the cash and cash
currencies. 2) Determine whether the rates used agree with supporting documentation. equivalents
X
3) Compare results against balances in the lead schedule. If the level of differences are outside an acceptable range select _______ transactions and
perform additional verification procedures.

3 Test of details C06 Cash count Count cash on hand (cash sales, undeposited receipts, petty cash), if significant. 1. Details/breakdown of cash on hand and supporting
documents

X X
cash count
form.xlsx
Compare daily totals for cash sales For ____ days during the period, compare daily totals for cash sales with amounts reported and deposited. 1. Daily totals for cash sales
2. Daily cash sales recorded X X
3. Daily amount deposited
 Files (Information to be obtained/evidence
Audit Procedures Ref. Description Detailed Work Steps E V C R&O P&D O M C P&D
to be gathered)
Vouch recorded receipts to bank For ____ days during the period, vouch recorded receipts to bank deposits. Investigate any unusual time delays in depositing cash receipts and any 1. Daily receipts
deposits splitting of cash receipts into separate deposits. 2. Daily amount deposited
3. Supporting documents and explanations for any
unusual time delays in depositing cash receipts and any X X
splitting of cash receipts into separate deposits

Compliance with agreements 1) Examine agreements relating to any escrow funds, compensating balances, and sinking funds. 1. List of significant agreements/arrangements related
2) Determine compliance with the agreements and whether necessary disclosures have been made in the financial statements. to cash, if any
2. Agreements for selected transactions
X X

Other General Procedures 1) Review the cash accounts in the general ledger for unusual items. 1. General ledger
2) Review the cash disbursements and cash receipts registers for unusual items; investigate any such items observed. 2. Cash disbursements and cash receipts register
3) Review bank confirmations, minutes, loan agreements and other documents for evidence of restrictions on the use of cash, or of liens on, or security 3. Bank confirmations, minutes, loan agreements and
interests in, cash. other documents
4) Confirm compensating balance arrangements. 4. Confirmation of compensating balance arrangements
5) Consider the implications of client management practices that result in recurring overdrafts to finance working capital. Consider inquiry of client 5. Supporting documents and explanations for any
management and legal counsel should such overdrafts be encountered in the audit. overdraft noted X X X X X

4 Procedures C07 Cash receipts application 1) Perform a proof of cash by reconciling activity per client records to activity per the bank. Also correlate to activity in Sales and Accounts Receivable, Schedules and supporting documents as applicable
Trade.
Responsive to Risk 2) Compare remittance advices or lists of cash receipts with the entries in the cash receipts register as to date, remitter, amount, and account distribution.
Assessment 3) Compare the details of duplicate deposit slips with the entries in the cash receipts register. Investigate abnormal delays in depositing cash receipts.
4) Compare the total amounts of daily deposits shown on the bank statements with the totals of the daily cash receipts shown in the cash receipts
register. Investigate unusual delays in depositing cash receipts and any splitting of daily cash receipts into separate deposits.
5) Test invoices and other original records of cash sales transactions to recorded cash sales, and recorded cash sales to supporting documents.
6) Test the recording of miscellaneous receipts (i.e., receipts not usually recorded in accounts receivable, such as scrap and royalties); consider whether
the recorded amounts are reasonable.
7) Compare entries in the cash receipts register (e.g., date, remitter, amount, and account distribution) with the remittance advices, lists of cash receipts,
duplicate deposit slips and bank statements.
8) Test the accounting classifications of cash receipts.
9) Test the mathematical accuracy of the cash receipts register.
10) Test the postings of the totals in the cash receipts register to the general ledger, customers’ ledger, and other subsidiary ledgers.
11) Test the authorization of credits, discounts and allowances in the cash receipts register.
12) Test the posting of individual cash receipts from the cash register and supporting documents to the customers’ ledger.

X X X

Cash disbursements application 13) Account for the numerical sequence of checks issued during a specified period.
14) Compare paid checks and supporting documents with the cash disbursements register as to date, payee, amount and account distribution; determine
whether supporting documents have been marked to prevent reuse.
15) Compare entries in the cash disbursements register with the paid checks and supporting documents as to date, payee, amount and account
distribution; determine whether supporting documents have been marked to prevent reuse.
16) Test the account classifications of cash disbursements.
17) Test the mathematical accuracy of the cash disbursements register.
18) Test the postings of the totals in the cash disbursements register to the general ledger and subsidiary ledgers.
19) Test the posting of individual cash disbursements from the cash disbursements register to the appropriate accounts in the subsidiary ledgers.
20) Determine whether the signatures on paid checks are authorized.
21) Compare endorsements with the named payee and investigate double or other unexpected endorsements.

Sample Documentation