Case 4: Audit of cash

As the auditor for Pokola Limited, you are to test the cash handing procedure at the company. In a meeting with the CFO during the planning stages of the audit, the auditor indicated that there was a high risk of misstatement due to fraud in the cash account, given the lack of proper segregation of duties. The auditor identified the following weaknesses in the internal control of the company as far as cash handling and processing is concerned:

Lack of segregation of duties of persons assigned to cash handing

Lack of count of paying customers

No duplicate receipts are used by the clerks to record cash collected

Lack of clarity of records on cash receipts

Long time gap between collected receipts and banking

Lack of evidential proof of deposited cash

Lack of internal control and accountability of cash handing in the company

Required:

From the list above, chose FIVE items and, as the auditor of the company discuss what tests could you perform to detect fraudulent activities in the cash account?