A proof of cash disbursements is not effective for discovering checks written for an improper amount, fraudulent checks, or misstatements in which the dollar amount appearing in the cash disbursements records is incorrect.

Question

Quizplus · Accepted Answer

A proof of cash disbursements is only designed to reconcile the total dollar amount of checks disbursed with the cash outflow recorded in the accounting records. It is not a comprehensive test that can identify specific errors or fraud related to individual checks. Other audit procedures, such as examining individual canceled checks and verifying vendor information, must be performed to uncover these types of issues.

A Proof of Cash Disbursements Is Not Effective for Discovering