Bank reconciliation ledger physical and technology controls

Monthly bank reconciliation control

Reconcile each bank account to the general ledger monthly to identify errors, unauthorized items, and differences.

Monthly reconciliation test

Inspect selected months, independently recalculate, agree balances to bank and ledger records, and investigate old or unusual items.

Monthly reconciliation evidence

Bank statements, reconciliations, general ledger, and supporting schedules.

Independent reconciliation review control

A person independent of preparation promptly reviews and approves the reconciliation and investigates unusual items.

Independent reconciliation review test

Inspect sign-offs and timestamps, evaluate reviewer independence, and examine actual investigation evidence.

Independent reconciliation review evidence

Review checklists, electronic approvals, and investigation notes.

Interbank transfer review control

Record transfers in both accounts and have a separate reviewer check the transfer schedule.

Interbank transfer review test

Compare amounts and dates near year end to both bank statements and book records and check both sides are in the correct period.

Interbank transfer evidence

Transfer schedules, bank statements, transfer confirmations, and the general ledger.

Cash journal entry control

Manual cash entries require appropriate approval and supporting documentation to address accuracy and override risk.

Cash journal entry test

Inspect selected entries and approvals, focusing on unusual period end entries and privileged users.

Cash journal entry evidence

Entry reports, audit trails, support, and approval records.

Petty cash safeguarding control

Keep petty cash in a locked box accessible only to the authorized custodian.

Petty cash safeguarding test

Observe storage, inspect access restrictions, and perform an unannounced count where appropriate.

Petty cash reconciliation control

Periodically reconcile cash and vouchers to the authorized fund amount.

Petty cash reconciliation test

Select reconciliations, count cash or inspect vouchers, and reperform the reconciliation.

Cash handling training control

Employees receive training and follow written cash procedures.

Cash handling training test

Inspect training records and procedures, interview employees, and observe handling practices.

Bank access control

Restrict system access by employee responsibilities and remove terminated users promptly.

Bank access test

Obtain user listings, inspect role assignments, and test access changes and terminated-user removals.

Bank alert control

Alerts and transaction monitoring identify unusual bank activity for follow up.

Bank alert test

Inspect settings and exception reports and verify flagged transactions were investigated and resolved.

Cash continuity and backup control

Business continuity and backup arrangements protect payment processing and transaction records.

Cash continuity and backup test

Inspect backup and recovery testing and verify cash records can be retrieved and reconciled.

Receipt sequence control risk

Omitted receipts; test by tracing sequences to accounting records.

Daily deposit control risk

Stolen cash or delayed deposits; test by comparing receipt, deposit, and bank records.

Segregation control risk

Theft concealed through record manipulation; test duties, permissions, and actual process operation.

Receipt comparison control risk

Deposits differing from receipts; inspect review and reperform the comparison.

Payment approval control risk

Unauthorized disbursements; inspect sampled payment approvals.

Three way match control risk

Invalid or inaccurate payments; inspect matched purchasing documents.

Payment access control risk

Theft or misuse of payment instruments; inspect access and safeguards.

Vendor approval control risk

Fraudulent vendor payments; inspect approval and independent validation.

Reconciliation control risk

Unrecorded or misstated transactions; reperform selected reconciliations.

Reconciliation review control risk

Undetected errors; inspect timely review and follow up.

Interbank review control risk

Cash overstatement through timing differences; compare both banks and both book records.

Journal approval control risk

Improper or unauthorized cash adjustments; inspect support and approval.

Petty cash control risk

Physical misappropriation; inspect custody, count cash, and reconcile vouchers.

Bank access restriction risk

Unauthorized electronic payments; inspect user access and payment rights.