Question

Which of the following verifications would generally not be performed by the auditor in the month subsequent to the balance sheet date?

A) Foot the lists of all canceled checks, debit memos, deposits, and credit memos.
B) Verify the bank statement balances when the footed totals are used.
C) Verify the book statement balances tie to the cash receipts and disbursements journals for the year under audit.
D) Review the items included in the footings to make sure that they were cancelled by the bank.

Answer 1

An auditor generally would not review items included in the footings to make sure that they were cancelled by the bank in the month subsequent to the balance sheet date, as this task is typically part of the client's monthly bank reconciliation process.

Step-by-step explanation:

The question relates to the types of verifications an auditor would perform after the balance sheet date. Typically, in the month subsequent to the balance sheet date, an auditor would not review the items included in the footings to ensure they were cancelled by the bank (option D). This type of review is generally conducted by the client's staff as part of the monthly bank reconciliation process. The auditor's focus in the post-balance sheet period is usually on verifying the bank statement balances when footed totals are used (option B) and ensuring that the book statement balances tie to the cash receipts and disbursements journals for the year under audit (option C), which are part of substantive procedures to confirm the closing cash balance as of the balance sheet date.