The auditor should visit the business house at the close of the financial period or on the following morning and actually count the cash in hand and compare it with the balance in hand as shown by the cash book. If there are different kinds of cash balance e.g. Petty cash balance, cash in till, etc. They should be counted simultaneously so that shortage in one account may not be up from cash in hand from another account.
He should also count cash, stamps and I.O.you's in hand. He should make searching enquiry to find the genuineness of I.O.you's. If any advance has been made to a director or any officers of the company, an acknowledgement should be obtained. If it is nor possible for the auditor or his accountant to pay a visit to actually count the cash in hand, he may go on a subsequent day and count the cash in hand and exhaustively vouch the petty cash in hand with the balance as shown by the books of the accounts.
Another method of verification of cash in hand is to ask his client to deposit the whole of cash in hand including petty cash etc, into the bank on closing day and then drawing a cheque on the following day for expenses of reopen the cash book with cash drawn from bank.
He should also count cash, stamps and I.O.you's in hand. He should make searching enquiry to find the genuineness of I.O.you's. If any advance has been made to a director or any officers of the company, an acknowledgement should be obtained. If it is nor possible for the auditor or his accountant to pay a visit to actually count the cash in hand, he may go on a subsequent day and count the cash in hand and exhaustively vouch the petty cash in hand with the balance as shown by the books of the accounts.
Another method of verification of cash in hand is to ask his client to deposit the whole of cash in hand including petty cash etc, into the bank on closing day and then drawing a cheque on the following day for expenses of reopen the cash book with cash drawn from bank.