Risk assessment in the available

In the evaluation that the financial auditor performs of the risk that is in the management of the available, it must be taken into account the one that appears inherent to the organization and the one that occurs due to failures in the control measures

The management of the accounts that have to do with cash resources or in the banks takes a great importance in the management that the financial administrator carries out of the sources of financing in the short term. The task of the financial auditor is to verify that these items present the least possible risk in their use to achieve the organizational objectives.

The measurement of risk made by the auditor must be carried out on the generally accepted auditing standards, which is why this article aims to show some of the evidence that the accounting professional develops in this regard and the possible solutions it has when finding failures in handling the available.

Inherent risk factors

Origin	Possible solution
The entity makes frequent changes to authorized signatures	Greater control of authorizations by verifying the causes of the modifications
Significant cash inflows and outflows have been made	Detailed analysis of relevant operations
Significant amounts of cash have been received	Checking the origin and destination of funds
Movements between banks are frequent and insignificant	Detailed reconciliation analysis
Electronic funds transfers are frequent	Increased level of evidence analysis to verify the integrity of transfer operations
One of the banks with which the company operates appears financially weak, which may affect the availability of funds	Efforts to verify the recovery of funds

To perform the examination, the auditor may ask some questions about the accounting principles that should be applied to the operations of the company in terms of cash resources.

Available

Within the available we find all items such as cash, savings banks and banks, both national and foreign.

Whole

Are all collections or disbursements that occur within the period recorded? Do the balance of all transactions that involve collections and disbursements are shown in the financial statements?

Existence

Do all income and expenses represent economic events that have occurred during the period and are attributed to the entity? Are the balances of the available group reflected in the financial statements real?

Accuracy

Are receipts and disbursements recorded in accordance with the provisions of the Generally Accepted Accounting Principles? Are the receipts and expenses recorded in the accounts made by the correct amounts arithmetically?

Valuation

Are all accounts in the available group properly valued at the correct amounts in accordance with Generally Accepted Accounting Principles?

Presentation

Are all accounts in the available group properly classified according to the Generally Accepted Accounting Principles? Are all accounts in the available group properly described in accordance with the Generally Accepted Accounting Principles? All accounts in the available are duly displayed in the financial statements in accordance with the rules and provisions that apply to it?

The inherent risk classification after the analysis can be classified as: high, medium or low. According to the analysis, the auditor will take the necessary control measures to adjust the available items to the objectives proposed in the audit program.

Control risk factors

Origin	Possible solution
Physical safeguards for cash on hand are not adequate	Increase of balance tests to verify their integrity
Bank reconciliations are not performed regularly or are not adequately performed	Further substantive tests to check bank balances
Pending checks and deposits in transit are not adequately controlled	Efforts to verify the veracity and integrity of transactions
Rejected transactions are not identified, analyzed and corrected in a timely manner	Direct controls cannot be trusted
Management does not frequently review book balances	Independent and managerial controls cannot be relied upon

The results obtained in this examination may be due to failures or compliance presented by the good application of the control measures proposed by the managers, administrators and auditors of the company.

The audit should be based on evidence that applies the fundamentals of auditing standards and generally accepted accounting principles.

Control environment

The control environment aims to analyze whether the people who are performing and controlling the work perform their functions according to the previously established objectives, procedures and audit program. It also verifies whether the organizational objectives set by senior management are fully met, seeking to find possible irregularities, in order to take the necessary measures for their proper execution. The auditor takes from this analysis the tools to give his opinion on the risk in which the accounts that have to do with the available move.

The following are a series of questions that the auditor may ask to develop such an analysis:

Are there policies for managing available? Are there manuals for managing available? Are systems for managing available are systematized or manual? Policies for managing available are aimed at achieving the entity's objectives and goals? Senior management is concerned with the improvement of human resources through training courses for officials who handle the available? Are the skills and abilities of the applicants taken into account according to the functions of the position in the available area? There is a review of the new policies and practices in the available area regarding their adequacy and compliance? The main critical points in the available area that require greater control are identified,applying the exception principle? The degree of effectiveness of the current administrative controls is measured? Is there an optimal allocation of resources? Is the available one identified and interrelated with the company's income and expenses? The weaknesses of the available area of the company are revealed organization and means are provided to correct such deficiencies? Is accounting information useful for decision-making in the available area?

Now the auditor must determine the degree of risk against the management of the available, with the analysis made of the inherent risk factors, control and the control environment that is reflected in activities such as:

Excessive decentralization of operations No clear policies on fund management No use of cash flow analysis or projections as a fund management technique

Finally, the respective risk matrices are prepared, and they summarize the management that the company is carrying out of the available one, an example of this is seen below:

Detection risk matrix

Inherent risk	Control Risk	Detection Risk
Tall	Tall	Low

Risk profile matrix

Inherent risk	Control environment	Risk profile
Tall	Neutral	Tall

Evaluation	Whole	Existence	Accuracy	Valuation
R. Inherent	Medium	Low	Tall	Medium
A. Control	Strong	Neutral	Neutral	Neutral
Profile of r.	Low	Low	Tall	Medium