Audit of Cash

and Cash
Accounts

Possible Audit Criteria:

PD 1445
Section 74 of PD 1445 provides that:
Monthly Reports of Depositories to agency head. At the close of each
month, depositories shall report to the agency head, in such
forms he may direct,
the condition of the agency account standing their books. The
head
of the
agency shall see to it that reconciliation is made between the balance shown in the
reports and the balance found in the books of the agency
COA Circular 96-011
Section 3.3 of COA Circular No. 96-011 dated October 2, 1996 states that:
The Accountant shall draw journal vouchers to record all valid
items that require adjustment and correction in the GL.

reconciling

Manual on Bank Regulations

Section X263 of BSP Manual on Bank Regulations provides that:
Banks may
impose and collect service charges and/or maintenance fees
on savings and
demand deposit accounts, whether active or dormant, that
fall below the
required minimum monthly average daily balance (ADB).
Cash Examination Manual

Audit Risk Area

1. Possible misuse of public funds

Audit Objectives
Cash in Vault:
1. To determine whether all government funds in the hands of
an Accountable Officer (AO) are actually existing and
properly accounted for;
2. To determine whether all monies received had been correctly
receipted, recorded, and deposited intact in accordance with
laws, rules and regulations;
3. To determine if all accountable forms are duly accounted for;
and
4. To determine whether the agency and its Accountable
Officers are adhering strictly to prescribed rules and
regulations on cash transactions.

Audit Objectives Cont.

Cash in Bank:
1. To ascertain whether disbursements are valid, duly
authorized, actually paid and properly recorded;
2. To prove the accuracy of cash in bank balance as
reflected in the ledger, cashbook, cash receipts record
(CRR) and Check disbursements record (CkDR)
reconciled with that of the bank record;
3. To determine whether the agencys practices and
procedures provide adequate safeguards against fraud
and losses of government funds;

Audit Procedures
Cash in Vault:
1. Conduct cash count. Determine the legality of
cash items if there are any;
2. Analyze collections and remittances/deposits to
determine if amounts collected are
remitted/deposited in the manner and frequency
prescribed;
3. Verify if the Accountable Forms on hand tally with
Report of Accountability for Accountable Forms.;
4. Prepare working paper.
5. Issue AOM/NS/ND/NC

Audit Procedures Cont.

Cash in Bank (Local Currency Account):

1. Check if all transactions are properly documented and
recorded;
2. Determine the balance per books of the Agency and the
balance per bank statement;
3. Trace the deposits per ledger to the bank statement to
ascertain whether there are deposits not yet
acknowledged by the bank;
4. Trace the checks issued per ledger to the bank statement
to ascertain whether there are checks not yet presented
to the bank for payment;
5. Verify reconciling items like bank debit/credit memos and
other unadjusted reconciling items;
6. Prepare working paper
7. Issue AOM/NS/ND/NC

Audit Observation Memorandum

1. Items requiring adjustment by the Agency for LBP CA
#s 0752-1009-34; 0752-1020-74; and DBP CA # 1057935-1 remained unadjusted as of June 30, 2013,
affecting the accuracy of the Cash in Bank.
Section 74 of PD 1445 provides that:
Monthly Reports of Depositories to agency head. At the close of
each month, depositories shall report to the agency head, in such forms
he may direct, the condition of the agency account standing their books.
The head of the agency shall see to it that reconciliation is made between
the balance shown in the reports and the balance found in the books of
the agency
Section 3.3 of COA Circular No. 96-011 dated October 2, 1996 states
that:
The Accountant shall draw journal vouchers to record all valid
reconciling items that require adjustment and correction in the GL.

Verification of the Bank Reconciliation Statements as of June 30, 2013

revealed that the following reconciling items remained unadjusted in the
agency books.
A. LBP CA #0752-1009-34 (GF):
Debit Memo (7/02-10/12)
Credit Memo (12/06-10/10)
Outstanding Checks:
Stale (issued 2/11-6/12)
Outstanding (issued 3/12-12/12)

P 1,320,876.99
5,838.00
69,817.41
18,835,352.99

B. DBP C/A # 1057-935-1(TF).

checkbook requisitions (5/08-3/12)

11,350.00

C. LBP C/A#0752-1020-74 (SF).

Prior period unreconciled difference

274,839.05

Initial interview was conducted and the Provincial Accountant replied

that they cannot effect adjustment on those reconciling items because
they cannot find the supporting documents. It happened because
everytime there is a change in administration, the accountant is also
changed and there was no proper turn-over of documents. Another
factor was the accounting office was transferred to the new building.

The following are our audit recommendations:

1. Exert effort to find the documents of all reconciling items
to be added/deducted from the book balance as
credit/debit memorandum that had remained unadjusted
in the books over a long period of time to ascertain the
cause.
2. Determine all outstanding checks that had become stale
without valid claimant to facilitate restoration to cash in
bank.
3. Cost of checkbooks that were deducted from the balance
of Current Account No. 1057-935-1 with DBP shall
appropriately be taken up in the books.
4. Adhere to proper reconciliation of depository account
balances between the bank and the book.

2. LBP account No. 0752-1087-22 fall below the

average daily balance incurring bank charges of
P1,200.01, as required under Sec. X263, BSP
Manual on Bank Regulations.

Section X263 of BSP Manual on Bank Regulations provides that:

Banks may impose and collect service charges and/or
maintenance fees on savings and demand deposit accounts,
whether active or dormant, that fall below the required minimum
monthly average daily balance (ADB).

Verification of Bank Reconciliation Statement also revealed that

Cash in Bank balance of LBP Account No. 0752-1087-22 fall
below the average daily balance for more than a year thus, it
incurred a bank charge of P1,200.01 as of June 30, 2013.
The bank charges of P1,200.01 was incurred from January 1,
2013 to June 30, 2013

We recommend that the amount of P1,200.01 should be paid

by responsible employee. The required daily
average
balance should be followed to avoid bank charges.

The End
and
Thank you