What are the transaction-related audit objectives for the verification of cash receipts?

When a company employee is responsible for accepting or depositing cash based on the money that was taken in during that day, then there should be an audit. It isn’t because the boss or owner of the company doesn’t trust his or her employees, but it should be a common practice for this company.

This would allow for fewer errors to be made by both the employees and the managers. When the company designs a format for transactions and verification, the audit’s objectives should include that the amount of money should match the amount of receipts.

If they don’t, then this employee should not be allowed to be responsible for accepting or depositing the cash. Then this problem will most likely not happen again.

Transaction-related audit objective & key internal controls:

1. Recorded cash receipts are for funds actually received by the company (occurrence). Separation of duties between handling cash and record keeping. Independent reconciliation of bank accounts.

2. Cash received is recorded in the cash receipts journal (completeness). Separation of duties between handling cash and record keeping. Use of remittance advices or a prelisting of cash. Immediate endorsement of incoming checks.Internal verification of the recording of cash receipts. Regular monthly statements to customers.

3. Cash receipts are deposited and recorded at the amounts received (accuracy).