Question

The following client-prepared bank reconciliation is being examined by Mautz, CPA, during an audit of the financial statements of Wolfe Company: Wolfe Company Bank Reconciliation Village Bank Account 2 December 31, 2022 Balance per bank (a $ 18,375.91 Deposits in transit (b) 12/30 $1,471.10 12/31 2,840.69 4,311.79 Subtotal 22,687.70 Outstanding checks (c) 837 6,000.00 1941 671.80 1966 320.00 1984 1,855.42 1985 3,621.22 1987 2,576.89 1991 4,420.88 __419,466.21) Subtotal 3,221.49 NSF check returned 12/29 (d) 200.00 Bank charges (e) 550.00 Error check No. 1932 (1__ 148.10 Customer note collected by the bank ($2,750 plus $275 interest) (a)_ (3,025.00) Balance per books (1) $ 1,094.59 Required: Indicate one or more auditing procedures that should be performed by Mautz in gathering evidence in support of each of the items (a) through (h) above.

Answer 1

Answer:  

Auditing procedures that are to be performed for verifying bank reconciliation are:

1. Cheque issued but not presented for payment in the reconciliation should be cross verified with the cheque book and check the cheque number is same or not.

2. Cheque received but not deposited should be verified with the copy of cheque received by them.

3. Whether any cheque becomes stale the same should be reversed in the books to be verified.

4. Any other transactions not reflected in the company books but reflected in the bank statement are to be cross verified by obtaining bank statement and reasons to be analysed.