Advanced Audit, Chapter 23: "Audit of Cash and Financial Statements" flash cards

Imprest Account

(23.1) A type of cash account maintained by a company - used to pay for small incidental or routine expenses.

Cash Equivalent

(23.1) A short-term, highly-liquid investment that are both readily convertible to cash, and so near their maturity that they present an insignificant risk of changes in value.

General Cash Account

(23.1) The primary bank account for most organizations. Virtually all cash receipts and disbursements flow throughout this account at some point.

Branch Bank Account

(23.1) A separate bank account, maintained at local banks by branches of a company.

Imprest Petty Cash Fund

(23.1) A fund of cash maintained within the company for small cash acquisitions or to cash employees’ checks. The fund’s fixed balance is comparatively small and periodically reimbursed.

Financial Instrument

(23.1) Any tradable asset that might include cash, equity securities, debt securities, or derivative instruments.

Cutoff Bank Statement

(23.3) A partial-period bank statement and the related canceled checks, duplicate deposit slips, and other documents included in the bank statements, mailed

Bank Reconciliation

(23.3) The monthly reconciliation, usually prepared by client personnel, of the differences between the cash balance recorded by the general ledger and the amount in the bank account.

Standard Bank Confirmation Form

(23.3) A form approved by the AICPA and American Bankers Association through which the bank responds to the auditor about bank balance and loan information provided on the bank balance.

Kiting

(23.4) An instance when money is transferred from one bank to another, but the transaction is incorrectly recorded.

Proof of Cash

(23.4) A four-column audit schedule prepared by the auditor to reconcile the bank’s record of the client’s beginning balance, cash deposits, cleared checks, and ending balance for the period within the client’s records.

Fair Value Estimate

(23.4) The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.