ACCA Audit and Assurance (F8) Practice Exam

When is it appropriate for the auditor to attend a cash count?

1. Only during periodical cash reviews

2. When cash on hand is negligible

3. When cash held is material

4. For each transaction involving cash

The correct answer is: When cash held is material

The auditor’s attendance at a cash count is particularly relevant when the cash held is material to the financial statements. The reason for this lies in the inherent risks associated with cash handling. Cash is inherently more susceptible to misappropriation and errors due to its liquid nature, which makes it easier to divert or misreport. When cash is material, the auditor needs to obtain sufficient appropriate audit evidence about its existence and completeness. Attending the cash count allows the auditor to verify the physical cash balance against the recorded amounts in the financial statements. This direct observation helps ensure that the cash is accurately reported and provides a level of assurance regarding the controls in place for cash handling. In circumstances where the cash on hand is negligible or only during periodical reviews, the auditor may not need to attend every count, as the risk associated with immaterial amounts might be considered low. Similarly, attending cash counts for each individual transaction would be impractical and unnecessary in the context of audit efficiency, as this would overwhelm the auditor with information that is not proportionate to the risk and may prevent them from focusing on significant areas of concern. Thus, when cash held is material, it is justifiable and necessary for the auditor to attend the cash count to ensure the integrity of the financial