Auditors are likely to prepare a proof of cash when the client has
A) material internal control weaknesses in cash.
B) material internal control weaknesses in accounts receivable and revenue.
C) material internal control weaknesses in accounts payable and inventory.
D) material internal control weaknesses in payroll.

Question

Quizplus · Accepted Answer

A proof of cash is typically prepared when there are material internal control weaknesses in cash. This document helps auditors reconcile the bank balance with the accounting records and identify any discrepancies or fraudulent activity. It is important to perform this procedure when there are control weaknesses to ensure the accuracy of the cash balance and prevent potential misstatements. Weaknesses in other areas, such as accounts receivable, revenue, accounts payable, inventory, or payroll, may require different audit procedures.

Auditors Are Likely to Prepare a Proof of Cash When