1. Explain the relationships among the initial assessed control risk, tests of controls and substantive tests of transactions for cash receipts, and the tests of details of cash balances. 2. Distinguish between the verification of petty cash reimbursements and the verification of the balance in the fund. Explain how each is done. Which is more important? 3. Why is there a greater emphasis on the detection of fraud in tests of details of cash balances than for other balance sheet accounts? Give two specificexamples that demonstrate how this emphasis affects the auditor’s evidence accumulation in auditing year-end cash. 4. Describe what is meant by a cutoff bank statement and state its purpose.
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