ICAEW ARF · Chapter 6 · Question 8 of 11
What is the main purpose of a company preparing a monthly bank reconciliation that is reviewed by someone independent of the cash book?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) To detect errors or irregularities in the cash book or on the bank statement on a timely basis
Explanation
A bank reconciliation compares the cash book with the bank statement and explains differences, such as timing items, so errors and unauthorised transactions can be identified and corrected. Independent review increases its effectiveness. It is a detective control and does not authorise payments or prevent theft before banking.
More Controls over payroll, inventory and cash MCQs
- Q10Which of the following describes an imprest system for petty cash?
- Q11Which of the following controls is most likely to detect 'teeming and lading' by a receivables clerk?
- Q1Which control best reduces the risk of fictitious ('ghost') employees being added to the payroll?
- Q2Which control best reduces the risk of hourly paid staff being paid for hours they did not work?
- Q3Which control best ensures that PAYE income tax and National Insurance deducted from employees are correctly paid over to HM Revenue &…