One of the audit procedure we perform while auditing cash account is review of bank reconciliations for year, especially at month end. Auditor need to excel higher level of cautiouness while reviewing year-end bank reconciliation.
In this thread, we would like to highlight to our readers on the potential distortions ( on cash balance) resulted from unpresented cheque. To illustrate with an example:
Susan is the accountant of Company ABC, who has a December year-end. On 31 December 2008, Susan has approved a few cheques payable to their creditors, amounted to US$200k. Account executive has input the payments into the systems after Susan has approved the cheques. However, the cheques payable to their creditors are not delivered to their creditors until after year-end.
Is there any financial impact to the financial of the Company? Yes or No? If yes, what would be the impact then ?