Question

The balance of cash in often between one to five percent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this _____________________.

• A. Cash is always material as materiality is qualitative concept
• B. No audit of cash is needed when, in auditor's opinion, cash is immaterial. Materiality is a relative concept
• C. The cash balance need only be audited if the balance is in overdraft
• D. Cash is to be verified if control risk is assessed as high

Answer 1

The correct option is A Cash is always material as materiality is qualitative concept

Audit of cash is imperative for any audit. even if controls risk is assessed low, it has to be verified by the auditor due to the very process of audit and to check if the processes are in line with the company policies.