Consider the audit procedure referred to as “confirm cash balances at year-end.”
a. How does the auditor perform this procedure? What are the auditors’ responsibilities for this procedure?
b. When is the procedure performed?
c. What is the purpose of external bank confirmations?
d. Describe the assertions associated with a bank confirmation. Explain why they are important to the cash process.
e. Identify the accounts that may be misstated if cash confirmations are not done.
f. If these accounts are misstated, how will outsiders be affected? Explain your answer.