Auditing and Assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

Give your comments on the following:
Xylocaine Communications Company is one of the leading companies dealing with various telecommunication services, wireless networking and internet related services. It receives huge collection of cash daily from its customer on various accounts. Everything looked well, until one day it was noticed that large amount was missing in the bank account. In fact that said amount was not credited in the bank account at all and it was missing since last few years. When the case was revealed, probably it was too late to recover the money. Considering the above case, what are the likely documents you would like to examine as an auditor of the company?
Answer.
Considering the case presented the auditor of Xylocaine Communications Company should check all the books of accounts and documents related with the cash and bank transactions. Hence, the likely documents the auditor should examine in the circumstances presented are mentioned hereunder:

 Separate Cash receipt register for different services like tele-communication, wireless networking and internet related services
 Prenumbered Receipt pad for collecting cash.
 Security arrangement in the counter area.
 Procedures followed to deposit the amount in the bank
 Special arrangements with bank for transferring funds, if any
 Bank reconciliation statement
 Duty rotation of the personnel, directly handling cash collection
 Reporting arrangement to central office
 Fidelity Insurance etc.
 Bank deposit slips



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