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Audit Area Substantive Test <br />m Cash and investments • Send bank confirmation forms (completed by management) <br />to respective financial institutions, compare confirmed <br />balances to bank statements, and investigate discrepancies. <br />• Consider allowability of investments in accordance with State <br />statute and the County's investment policy. <br />• Agree book balances to a trial balance account (or group of <br />accounts for pooled cash systems). <br />• Test bank reconciliations by tracing deposits in transit and <br />outstanding checks to the subsequent period statement. <br />Trace inter -bank transfers in transit between account <br />reconciliations. Identify outdated or unusual reconciling <br />items. <br />• Consider the appropriateness of accrued interest on <br />certificates of deposit and investments. <br />• Calculate Federal Depository Insurance Coverage (FDIC). <br />• Prepare financial statement disclosures such as those <br />l concerning interest rate risk, credit risk, and concentration of <br />credit risk. <br />Receivables • Obtain subledgers for significant account balances. Select <br />items for detail testing and obtain subsequent receipt noting <br />whether the amount was earned prior to year-end and <br />received in the next period. <br />• Consider whether any receivables in governmental funds are <br />collected outside of the period of availability (as it is defined <br />by the County) and should be deferred in the fund financial <br />statements. <br />• Trace grant receivables to financial status reports, subsequent <br />receipts, and/or determine whether the recorded receivable is <br />equal to grant expenditures, less actual cash receipts. <br />• Trace utility receivable balances to detail customer reports. <br />Through the use of statistical sampling, test select customer <br />balances for proper recording. <br />Inventory • Compare detailed~ listings of items, individual cost, and <br />extended cost to the general ledger control accounts. <br />• Inquire about obsolete inventory. <br />PrepaidsT • Determine the nature of prepaid items in each general ledger <br />account. <br />• Recalculate prepaid balance using invoices and check <br />vouchers and determine whether the amount was paid prior <br />to year-end. <br />Rehmann <br />