An audit was performed for Daley’s Motors. The evidence for the audit of cash receipts and cash payments was based primarily on testing controls. The audit assistant, as part of his interim control testing, had noted that all bank reconciliations for the year had been reviewed — a good control. However, he had also noted that, for the last three months, there was a ‘net miscellaneous reconciling item’ of £42,000.

The audit assistant questioned the accountant about this item and was told the client did not have time to follow this matter up. He was assured that ‘it would all come out in the wash by balance date’. As the reconciling item was immaterial, the audit assistant had performed no further work in this area.

Required

(a) Has the audit assistant obtained sufficient evidence to rely on this control?

(b) If you were the audit senior on the engagement, what changes would you make to the year-end work programme (if any)?