34 Which procedure is an auditor most likely to use to detec

34. Which procedure is an auditor most likely to use to detect a check outstanding at year-end that was not recorded as outstanding on the year-end bank reconciliation? repare a bank transfer schedule using the client\'s cash receipts and cash disbursements journal. b. Receive a cutoff bank statement directly from the client\'s bank. c. Examine detail on bank deposit slips subsequent to year-end d. Confirm the year-end balance using the standard bank confirmation form.

Solution

Answer: Option a. Prepare a bank transfer schedule using the client’s cash receipts and cash disbursements journal.

The bank transfer schedule is prepared by the auditor to show all the deposits and withdrawals from a bank account including the intra-bank transfers along with the withdrawal and deposit dates for a few days before and after the end of a reporting period. This would help in uncovering any check that was outstanding at year-end which was not recorded as outstanding on the year-end bank reconciliation. Hence option a. is the correct answer.

Options b. and d. are incorrect since the cut-off bank statement and bank confirmation would not show the checks that are outstanding. Option c. is also incorrect since bank deposit slips are used for check deposits and will not show checks issued and outstanding.