Financial Statements Line Item Account

Cash and cash equivalents Petty Cash, Revolving Funds

Cash in Bank

Loans and Receivables All Types of loans

Loans payable All Types of loans

Interest Expense and Accrued

Interest
 Deposit Liabilities

Interest income, service fees,

Income
other income

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Audit Objective
Section A: Confirmations

To determine that:
 Principal and interest accrual accounts
accurately reflect the Coops's liability.
 Member's deposit account balances are
accurately recorded.
Section B: Reconciliations

To determine that:
 Reconciliations are properly completed on a
recurring basis for all balance
sheet accounts and internal DDA accounts
related to deposit operations and
correspondent banks.
 Liabilities are recorded in the proper period.
 Audit Procedures

Conduct a cash count of undeposited collections, petty cash, and other funds.

> Obtain custodian’s signature to acknowledge return of items counted

> Reconcile items counted with general ledger balances
> Trace undeposited collections counted to bank reconciliations
> Follow up dispositions of items in cash counted:

- Undeposited collections should be traced to bank deposits

- Checks accommodated in petty cash should be deposited after the count to establish their validity
- IOUs in the petty cash should be confirmed and traced to collections in the next payroll period
- Expense vouchers should be traced to the succeeding replenishment voucher

> Coordinate cash count with count of marketable securities and other negotiable assets of the client
> Obtain confirmation of year-end fund balances of cash not counted in branches or other offices

Confirm bank balance by direct correspondence with all banks in which the client has had deposits and loans during the yea

Obtain bank reconciliation

- Check arithmetical accuracy of reconciliation
- Trace balance per book to the general ledger balance of cash account
- Trace balance per bank to bank statement and compare with amount confirmed by bank
- Establish authenticity of reconciling items by reference to their respective sources like bank debit or credit advices or duly a
vouchers
- Investigate checks outstanding for a long period of time
- Investigate any unusual reconciling items
- Where internal control over cash is weak, consider preparing a proof of cash reconciliation

Determine any restrictions on availability of cash

Obtain subsidiary ledger of all types of loans and agree to trial balance.

Select top 10 borrowers and send confirmation for outstanding loan balance.

Select 10 loan releases during the year and inspect the required loan forms. Check if it follows the loan policy.

Obtain aging of loans and receivables. Review adequacy of the allowance for uncollectable accounts in accordance with Coop
1. Compare current year balances with prior year and ensure reasonableness of changes during the year. Inquire into and obta
unexpected changes.

2. Obtain a schedule of loans payable (including debt outstanding at the end of the prior year, as well as any new debt or rene
beginning and ending balances and borrowings and repayments during the year, and perform the following:

> Make inquiries of knowledgeable management.

> Consider any evidence of additional debt obtained through examination of minutes of the board, significant contracts, confi
accounts

3. For each lender (or selected lenders) with which Coop had debt outstanding at the prior year end or during the current year
client prepare, a confirmation request. 4. Compare replies to requests. Prepare, or have the client prepare, reconciliations

1. Obtain a schedule of accrued interest expense. Test the summarization and trace the total or the individual amounts, as app
ledger.

2. Make a selection of debt instruments tested in Procedure 1 and, for each item selected, perform the following:

> Based on the information in the confirmation concerning the date through which interest was paid and the applicable intere
amount of accrued interest

3. Calculate overall interest expense on loans for the year, and compare with recorded interest expense

4. Read the provisions in loan and debt agreements (and update descriptions thereof contained in our permanent files, if appl
following:

> Test that the client is in compliance with loan covenants and other significant provisions of the agreements
> If there are any provisions with which the client is not in compliance, determine whether the debt should be classified as cur
the provisions has been waived by the lender, obtain confirmation of the waiver from the lender

1. Balance the subsidiary system's month-end balance to the general ledger to ensure accuracy.
2. Extract all open deposit accounts and stratify by type of deposit (i.e. savings and time deposit).
3. Review the stratifications and determine the intended sample size for confirmation.

* A confirmation sample should include a random sample to achieve a 95 percent confidence level.
* To obtain the required number of responses as determined by sampling tables, divide the population by the historical respo
the number of positive confirmations to be mailed.
* Transaction accounts are to be confirmed using the "balance at last statement."
* Export the names, addresses, and current balances into the letter template. Verify that all letters were produced before mai
* Maintain a list of all sent confirmations.
* Produce a summary spreadsheet indicating total population, total confirmations sent, total received as correct, exceptions n
rate.
* Follow up with second requests on confirmations not received within two weeks.
1. Select account reconciliations for all deposit liability accounts. Review and test the reconciliations as follows:
 Determine that a proper reconciliation format was used and account reconciliation standards were adhered to.
 Foot reconcilements on a test basis.
 Trace totals to the general ledger and subsidiary ledgers as appropriate.
 Verify that adequate supporting documentation exists and each reconciling
item is listed with an initial entry date.
 Verify that the reconcilement is signed and dated by the preparer and an
authorized reviewer.
 Determine that unreconciled accounts, unsubstantiated reconciling items,
and items more than 90 days old were communicated to management.
2. For the remaining accounts not tested, select all general ledger suspense and
in-process accounts:
 Determine that principal and interest accrual accounts accurately reflect the
bank's liability.
 Determine that customer deposit account balances are accurately recorded.
 Test reconcilements in accordance with attributes described in No. 1 above.
 Age all items that make up the account balance and determine the reason for
any items more than __ days old.
Suspense Account Definition: A balance sheet account used to post transactions that
have not cleared due to timing differences or to temporarily post items pending a
decision of final treatment.

1. Compare current year with prior year and budgeted amounts to anyalyse the variation in the income. Inquire and documen
variation