Question

1. Identify the relevant assertions and risks of material misstatement that are typically related to the cash balance.

2. Give examples of substantive procedures used to test cash and relate them to the relevant assertions.

Answer 1

1. The relevant assertions we will be dealing in the next answer, the material misstatements typically related to cash are, suppression of cash and embazlement of cash. The accountant will wantedly suppress cash receipts, and it may also involve deferment of cash receipts called teaming and madding. Embazlement of cash means that hiding if cash or else taking the cash from the counter other than for business purposes.
2. The assertions include existence of cash, which can be verified through physical verification, the next one is completeness which also is confirmed through physical verification. Rights and this can be verified by checking the authority and authenticity of the transactions.