Internal Audit Checklist
Part B – Internal Audit of Specific Functions – V
(9) Checklist for Cash & Bank Balance
The cash and bank balance are the most liquid assets in any organisation and it requires stringent and effective control.
Documentation
(i) Receipt book and payment vouchers
(ii) Payroll and timesheet of workers
(iii) Handwritten or printed cheques
(iv) Bank statements/ bank reconciliation
(v) Bank balance confirmation certificate.
Legal Compliance
(i) Disclosed ‘cash and cash equivalent’ as per Schedule III of Companies Act, 2013?
(ii) Repaid loans/ advances/ deposits in cash?
(iii) Any cash payments against expenses above Rs.20,000?
(iv) Received an amount of Rs. 3 lakh or more in dealings of cash transactions?
Compliance with Accounting Standards and Standards on Auditing
(i) Internal Control Evaluation: Segregation of incompatible functions, authorization, recording of transactions, safe custody of cash, cheque books.
(ii) Verification of Cash Balances: Carrying out verifications, a procedure for verification, and frequency of verification.
(iii) Verification of Bank Balance: Examination of bank reconciliation statements and unusually old outstanding.
(iv) Examination of Valuation and Disclosure: Compliance with recognized accounting policies, practices, statutory requirements.
Procedures/ Controls
(i) Internal Control Evaluation
a. Segregation of duties relating to authorization of transactions, handling of cash/ issuance of cheques and writing of books of account, and rotation of the duties periodically
b. Proper authorization of cash and banking transactions
c. Daily recording of cash transactions
d. Periodic reconciliation of bank balances
e. Reconciliation of cash-on-hand with book balance on a daily
f. Safe custody of cash, cheque books, receipt books and other security documents
g. Cash/ fidelity insurance.
(ii) Verification of Cash Balances
(iii) Verification of Bank Balances
Reporting