CH 3.0-CONDUCT THE CASH EXAMINATION

Handbook on Cash Examination- Chapter 3 70
Chapter 3
CONDUCT THE CASH
EXAMINATION
Chapter
Overview
Now that you have prepared for the cash examination, you are
ready to conduct it. In this chapter, we shall discuss the
procedures and techniques common to the examination of the
cash and accounts of the collecting and/or the disbursing officer
and the detailed steps in the examination of the cash and
accounts of these officers. We shall also discuss specific
guidelines when there is a shortage/overage in cash found in
cash examination.
Learning Objectives
At the end of the chapter, it is expected that you will be able to:
 Enumerate some common procedures and techniques

followed in conducting a cash examination;
 Enumerate some detailed steps in the examination of the
cash and accounts of a collecting officer and/or of a
disbursing officer; and
 Tell what should be done when there is shortage/overage
in cash.
Basic Concepts
COMMON PROCEDURES AND TECHNIQUES IN CASH

EXAMINATION
Based on the audit plan, the examiners shall prepare the audit
program which is a detailed list of the audit procedures to be
applied to a particular audit objective for an account, class of
transactions or operations needed to implement the audit plan.
They may be guided by the following common procedures and
November 2002 Professional Development Center (PDC)

COMMISSION ON AUDIT
Commonwealth, Quezon City
techniques (Please refer to next topic for the detailed

procedures):
1. Introduce yourself properly to the accountable officer to be

examined. Show the Audit Assignment Order authorizing the
conduct of cash examination.
2. Require the accountable officer to temporarily suspend all

transactions and to clear his/her desk.
3. Cause the production of all cash, cash items, etc., by

signing and serving the cash production notice in the GF No.
74(A), Appendix 6. Require the accountable officer to
acknowledge the notice by signing the appropriate portion
provided therein.
4. See to it that all cash, treasury warrants, checks, money

orders, paid vouchers, other cash items, and unused
accountable forms are presented. Inspect the safe, desk
drawers and other cash receptacles where the cash and cash
items are usually kept.
5. Instruct the accountable officer to update his/her cashbook,

by recording all unrecorded valid transactions before the
count. The AO shall then foot the cashbook, balance and
rule it in ink. He/She shall write the following certification
immediately below the last entry in the cashbook.
“I hereby certify on my official oath that cash

and depository transactions had by me in my
capacity as Designation. of Name of Agency
. at the time of the examination, showing a
balance of Amount in words . (P ) have
been completely and correctly recorded in this
cashbook.”
(Date) (Signature)

COMMISSION ON AUDIT
However, if the transactions to be recorded are quite

voluminous, consider them as cash items during the count in
order not to cause delay in the audit.
6. Require the AO to segregate private and/or personal funds,

if any. Count them and have them placed in an envelope
properly labeled as “private/personal funds”.
7. Establish proper cut-off by (a) taking note of the last

number of OR/Check issued; (b) controlling paid voucher/
payroll; and (c) determining last entry/readings of
validating/metered postage machines/cash register, if any.
8. Require the AO to segregate by denomination the bills and

coins presented. Have the bills arranged in bundles of 100’s
and the loose coins in groups of 10’s or 20’s. Proceed with
the count in the presence of the accountable office, starting
from the highest to the lowest denomination, listing them in
appropriate space in the form. See to it that no bill or coin
presented has been demonetized. Mutilated bills must be
examined for acceptability as stipulated in CB Circular No.
10, dated Feb. 24,1949
9. Segregate the cash items by group, such as cash in pay

envelopes, checks, treasury warrants, money orders, paid
vouchers, partially paid payrolls, etc. Proceed with the listing
of the cash items using the space provided in the form.
Scrutinize the cash items presented to determine their
validity.
10. Immediately after establishing the accountability of the

AO being audited using GF 74(A), prepare the Statement of
Accountability using the format shown in Appendix 7 to
reconcile the established accountability with the accounting
records. Please refer to the Detailed Steps, succeeding topic.
For LGUs, reconciliation of the depository account of the

municipal government with the provincial government shall
be done using the form per Appendix 8. Reconciliation of
the city or provincial depository accounts with the Bank

COMMISSION ON AUDIT
shall be made using the format shown in Appendix 9,

Bank/Treasury Reconciliation Statement.
11. If the examination discloses a shortage or an overage in

the cash accountability of the AO, follow the procedures in
the specific guidelines on cash shortage/overage.
12. Evaluate the adequacy of the control measures adopted in

the management of cash using the questionnaire shown in
Appendix 5.
13. Assess the control weaknesses to determine if they are

potentially material or could have a material direct or
indirect effect on the financial statements.
14. Accomplish the auditor’s certificate on the cashbook.

Please refer to preceding session.
15. Review all necessary working papers. Prepare the

narrative report and the documents to support it.
DETAILED STEPS IN THE CONDUCT OF CASH

EXAMINATION
The following are the major steps in the conduct of cash

examination, the detailed steps for each shall be discussed:
1. Count Cash, Cash Items and Take Inventory of

Accountable Forms
2. Prepare the Statement of Accountability and accomplish
General Form No. 74-A
3. Prepare Reconciliation Statement of Accountability
4. Prepare the Bank/Treasury Reconciliation Statement
5. Analyze Cash Account and Prepare Accounting Entries

COMMISSION ON AUDIT
Count Cash, Cash Items and Take Inventory of Accountable

Forms
Collecting Officer
1. Examine all checks, money orders and treasury warrants

for regularity and compliance with regulations for
collections.
2. Ascertain that private checks are made payable to the

agency or the official title or designation of the agency head,
otherwise, they shall be disallowed.
Disallow the following cash items:

2.1 Post-dated checks and treasury warrants
2.2 Stale treasury warrants, checks and money orders
2.3 Chits, IOU’s, vale, or other forms of promissory
notes
3. Count and list all unused/unsold accountable forms on

hand, using the appropriate space in GF No. 74 (A). Inspect
unused booklets to make sure that each set of serial numbers
is complete. In case of missing copies, require the CO to
explain the loss in writing. See that the notice of loss is
immediately disseminated.
4. After the count of cash, cash items and accountable forms,

require the CO to accomplish and sign the certification in GF
No. 74 (A) in the presence of two responsible persons,
whose signatures shall likewise be affixed on the appropriate
spaces. Require the CO to affix his/her initial beside the total
of the cash and cash items counted to signify
receipt/acknowledgement of the return of the cash and cash
items counted.
5. Check all entries in the cashbook from the date of last

examination to the date of current examination. Use tick
marks to indicate review made.

COMMISSION ON AUDIT
5.1 Check individually the entries in the cashbook during

the period under review against source documents,
such as: official receipts, daily statements/abstracts of
collections, validated remittance advises/deposit slips,
etc. In case entries are based on daily
statements/abstracts, check against the official receipts.
5.2 Pay particular attention to the nature of collections

made, erasures and alterations to ascertain that the
amount actually collected is the amount recorded. If
necessary, confirm collections with selected payors.
5.3 Check the numerical sequence of ORs issued.

Ascertain that the original and duplicate copies of
cancelled ORs are submitted with the corresponding
RCDs. (Note frequent cancellations may be an
indication of an irregularity.)
5.4 Scrutinize the deposit slips for signs of tampering.

Confirm with the depository banks all deposits made
during the period under examination. Likewise, obtain
copies of debit memos issued by the bank during the
period under examination. See to it that these are taken
up in the cashbook. Determine propriety and
correctness of all adjusting and/or correcting entries.
5.5 Check the footings of the cashbook to ascertain the

correctness of its totals and balances. Take note of
errors and require CO to adjust/correct cashbook
accordingly.
5.6 Consider all discrepancies affecting the CO’s

accountability in the preparation of the Statement of
Accountability.
Disbursing Officer
1. Examine all cash items for regularity. See to it that they

are all current and duly approved. Check the following:

COMMISSION ON AUDIT
1.1 Unrecorded paid vouchers or payrolls.
Determine why the paid vouchers/payrolls are not

posted in the cashbook. If they are duly approved in all
respects, segregate them for posting in the cashbook by
the DO. Be sure that they are excluded in the listing as
cash items.
1.2 Cash in pay envelopes
Verify contents of pay envelopes for partially paid

payrolls, if any. Consider cash in pay envelopes as
cash items. Add the payments already made in the
payroll. The total of cash found inside the pay
envelopes and total payments already made should be
the amount considered as cash items. Disallow chits,
vales or IOUs inside the pay envelopes also known as
“white paper”.
1.3 Checks, warrants and money orders
Disallow the encashment of checks, warrants and

money orders out of the cash advance. (Note: the only
instance where checks and warrants in the possession
of the DO is allowed is if these were drawn as cash
advances in his/her favor.)
1.4 Paid invoices, Reimbursement Expense Receipt, Vales,

IOUs
If the cash advance examined is for petty expenses,

consider paid invoices/receipts covering petty expenses
for goods and services, like telegram, tolls, freight,
cartage as valid cash items. Disallow vales, chits or
IOUs.
2. Count and list all unused checks and warrants on hand

using the appropriate space in the GF No. 74 (A). Inspect
unused booklets for missing checks. In case of missing

COMMISSION ON AUDIT
check, require the DO to explain the loss in writing. See to it

that the notice of loss is immediately disseminated.
3. Require the DO to accomplish the required certificate in GF

No. 74 (A) in the presence of two responsible persons whose
signatures shall likewise be affixed on the appropriate spaces
provided therein, after the count of cash, cash items and
accountable forms.
4. Check all entries in the cashbook from the date of last

examination to the date of current examination. Use tick
marks to indicate review made.
4.1 Based on the accounting records, determine whether all

cash advances/withdrawals have been entered in the
cashbook on the dates they were received. List all
unrecorded cash advances/ withdrawal.
4.2 Check all disbursement against the corresponding

vouchers. Determine whether the vouchers were duly
approved and payments acknowledged. See to it that
the amounts entered in the cashbook are the approved
amount of the vouchers.
4.3 Trace refunds of cash advances to the original official

receipts issued therefor.
4.4 Determine propriety and correctness of the

adjusting/correcting entries.
4.5 Consider all discrepancies affecting the DO’s

accountability in the preparation of the Statement of
Accountability.
5. Check the footings of the cashbook to ascertain the

correctness of its totals and balances. Take note of errors and
require the DO to adjust/ correct the cashbook accordingly
after it has been reconciled with the accounting records.

COMMISSION ON AUDIT
Prepare Statement of Accountability and Accomplish GF

74-A (Appendix 6)
Collecting Officer
1. Prepare the Statement of Collecting Officer’s

Accountability, starting from the date of last examination to
current examination on the basis of verified amounts of
collections and remittances/deposits. Use appropriate spaces
in GF 74-A and require the CO to accomplish and sign the
certificate of accountability provided therein.
2. Compare the inventory of cash and/ or allowed cash items

with the balance of accountability as established. In case of
shortage or overage, follow the procedures for cash
shortages/overages.
Disbursing Officer
1. Prepare the Statement of Disbursing Officer’s Accountability

starting from the date of last examination to the date of
current examination, on the basis of verified cash advances
and disbursements. Use appropriate spaces in the form GF
74-A. Require the DO to accomplish and sign the certificate
of accountability provided therein.
2. Compare the inventory of cash and/ or allowed cash items

with the balance of accountability as established. In case of
shortage or overage, follow the procedures for cash
shortages/overages.
Prepare Reconciliation Statement of Accountability
1. Obtain of certification from the accountant as to the

latest balance of the accountability of the AO.

COMMISSION ON AUDIT
2. Obtain a copy of the latest reconciliation statement of

accountability.
3. Compare the entries per books of accounts. Take note of

differences and verify.
4. Determine whether all reconciling items in the previous

reconciliation statement have been adjusted / corrected.
Consider items not recorded to be reconciling items in the
reconciliation.
5. Prepare the reconciliation statement by considering all

differences as reconciling items.
6. Compare the reconciled balance with the balance of the

accountability of the accountable officer. In case of
discrepancy, review the reconciliation statement and/or the
Statement of Accountability of the Accountable Officer.
Balances of these reports should always be equal.
7. If the accountable officer being examined is performing

the collecting and disbursing function at the same time,
reconcile the depository account (if any) to determine
equality of the balance per bank/treasury with the balance
per accounting records using the format shown in Appendix
9. Please refer to next step.
8. Determine whether the reconciled bank balance plus the

cash and cash items counted will equal with the balance of
the cash accountability of the accountable officer. In case of
discrepancy, review the reconciliation statement and/ other
Statement of Accountability of the Accountable Officer for
any possibility of a shortage or overage. The established
balance of the accountability per Statement of Accountability
of the Accountable Officer should always be equal with the
reconciled balances in the Reconciliation Statement of
Accountability.

COMMISSION ON AUDIT
Collecting Officer
1. Prepare the Reconciliation Statement of Accountability

using the format shown in Appendix 7.
2. Follow the procedures for cash shortages/overages if

necessary or applicable, immediately after the preparation of
the Reconciliation Statement of Accountability.
3. Prepare the Statement of Accountability for Accountable

Forms using the format shown in Appendix 2.
3.1 Add all accountable forms received during the period

under examination to the inventory of accountable
forms as of date of last examination. Ascertain that all
accountable forms requisitioned/procured from all
sources are included.
3.2 Determine the total number of accountable forms

issued and/or transferred as shown in the cashbook,
Report of Accountability for Accountable Forms,
Appendix 2, and other records.
3.3 Deduct total issues/ transfers determined in 3.2 from

total inventories established in 3.1.
4. After establishing the accountability of the accountable

officers for accountable forms, require the CO to sign the
certification portion of GF 74-A certifying therein his/her
total accountability for accountable forms as of date of
examination.
5. Compare the balance of accountability arrived at in 3.3

with the inventory of accountable forms. Require the CO to
explain in writing differences, if any. Shortages of
accountable forms with money value shall, like a cash
shortage, be covered by a letter of demand.
Disbursing Officer

COMMISSION ON AUDIT
1. Prepare the Reconciliation Statement of Accountability

using the format shown in Appendix 7. Prepare the
Statement of Accountability for Accountable Forms in the
format shown in Appendix 2. Require the DO to sign the
certification therein.
1.1 Add all blank checks/ warrants received during the

period under examination to the inventory of checks/
warrantees of last examination date. Ascertain that all
accountable forms requisitioned/ procured from all
sources are included.
1.2 Determine the total number of accountable forms

issued and/or transferred as shown in the Report of
Checks Issued and Cancelled, Monthly Report of
Accountability for Accountable Forms, Warrant/ Check
Register and other records.
1.3 Deduct total issues/transfers determined in 1.2. from

total inventories established in 1.1.
2. Compare the balance of accountability arrived at in 1.3

with the inventory of blank checks/warrants. Require the DO
to explain in writing differences, if any. Report immediately
lost checks/warrants to the bank for stoppage of payment.
Prepare the Bank/Treasury Reconciliation Statement
Definitions of Reconciliation
 Reconciliation from the

accounting point of view is the process of bringing into
agreement two separate but related sets of books.
 Bank Reconciliation is a
process of bringing into agreement the cash balance per
books of the agency and cashbook balance per bank
statement of the bank.

COMMISSION ON AUDIT
 Treasury Reconciliation is a
process which brings into agreement the cash balance per
books of the agency and the cash balance per treasury
statements of the Bureau of the Treasury.
Objectives:
 To prove the integrity of all cash records;

 To determine the actual balance of agency-bank/treasury
account;
 To detect errors committed by either the bank/treasury or
by the agency;
 To detect any tampering of records and checks drawn or
deposited;
 To prove that the requirement of intact deposit/remittance
of daily collection is adhered to; and
 To adjust the errors committed and to update records.
Reconciling Items
The accounts to be reconciled are the different bank accounts

and for the LGU, also the Cash in the Treasury.
The following are the reconciling items:
1. Deposits in Transit are collections/deposits which are

already forwarded to the bank and already recorded by the
agency as deposits but too late to be reflected in the bank
statement.
2. Outstanding Checks are checks drawn and already given to

payees but not yet presented to the bank for payment.
3. Credit Memos refer to items not representing deposits

credited by the bank to the account of the depositor. They
have the effect of increasing the bank balance. They are
issued by the bank for the following:
3.1Matured time deposits transferred by the bank to the

current account of the depositor.

COMMISSION ON AUDIT
3.2Proceeds of bank loans deposited to the account

depositor.
3.3Notes receivable or drafts collected by the bank in favor

of the agency. This however, seldom happens in the
government because of the presence of collecting
officers.
4. Debit Memos refer to items not representing checks paid by

the bank but which are charged or debited by the bank to the
account of the depositor as cash disbursements. They have
the effect of decreasing bank balance. Debit memos are
issued for the following:
4.1No Sufficient Fund (NSF) are those which were

deposited but returned by the bank because of the
insufficiency of funds.
4.2Technically defective checks which were deposited but

returned to the bank because of technical defects such
as absence of signature, erasures, not countersigned,
conflict between amount and in figures, stale checks
and post dated checks.
4.3Bank charges include charges for interest, collection, cost

of check book, penalty, etc.
4.4Reduction of loan pertains to the amount of the deducted

from the current amount of the depositor owing to the
bank which has already matured.
5. Other reconciling items
5.1 Checks of other depositors charged against or

credited to agency/LGU account.
5.2 Errors which may be committed by either the bank or

by the agency. Included under this type of reconciling

COMMISSION ON AUDIT
item are the understatement/overstatement in taking

up deposit or checks issued, etc.
Procedures in Bank Reconciliation
1. Determine the balance per books of the Agency and the

balance per bank statement of the bank. See to it that the
beginning balance is the same as the previous month’s
ending balance.
2. Trace the deposits per general ledger to the bank statement

to ascertain whether there are deposits not yet acknowledged
by the bank. List them down in your working papers.
3. Trace the checks issued per general ledger to the bank

statement to ascertain whether there are checks not yet
presented to the bank for payment. List these outstanding
checks in your working papers.
In cases when the bank statement reflects only the current

month’s transactions, add the total checks negotiated as of
the previous month’s Bank Reconciliation Statement (BRS).
4. Examine the bank statement to determine whether there

are bank credits and bank debits not yet recorded by the
agency. List them down in your working papers.
5. Review the previous month’s BRS to check whether the

reconciling items requiring corrections by the agency or the
bank were adjusted. If not yet adjusted/paid, list down in
your working papers all the items not corrected and
outstanding checks not paid.
6. Review the previous month’s BRS to check whether or not

outstanding checks were already paid by the bank. List down
in your working papers all outstanding checks of the
previous month which have remained outstanding.
7. Verify reconciling items of the previous year which were

not paid/adjusted in the current year. These become current

COMMISSION ON AUDIT
year’s reconciling items. List them down in your working

papers. Trace these items to the BRS of December of the
previous year.
8. Watch out for errors and other reconciling items.
9. Examine and analyze all items in your work sheet and

prepare the reconciliation statement as per the format as
shown in Appendix 9.
The procedures for reconciling accounts with the treasury are

similar to the foregoing.
Analyze Cash Account and Prepare Accounting Entries
Collecting Officer
1. Analyze collections and remittances/ deposits to

determine if amounts collected are remitted/deposited in the
manner and frequency prescribed.
2. Inquire into major steps in the receiving, keeping,

disposing and accounting for collections. Identify deviations
from prescribed regulations and sound internal control.
3. On the basis of the duties of the CO and his staff, ascertain

whether the daily collections of the staff are turned over to
the CO at the end of the day. Check whether the agency
follows strictly the provisions of Section 75, GAAM Vol. I,
on the proper handling of collections/ remittances received
through the mails.
4. Determine the average collections of the CO for at least the

last six months and ascertain whether or not his/her bond is
appropriate.
5. Determine the adequacy of the measures adopted by the

agency to safeguard cash and whether the existing office
facilities of the Collecting Officer provide adequate
protection against loss.

COMMISSION ON AUDIT
6. Analyze collections on whether the cash/checks received were

deposited intact. Require the CO to explain any discrepancy
in the checks received and deposited.
Disbursing Officer
1. Analyze the cash advances and disbursements of the DO

during the last six months to determine whether or not cash
advances are adequate or excessive. Also determine the
adequacy of the bond.
2. Determine the adequacy of the measures adopted by the

agency to safeguard cash and whether the existing office
facilities of the Disbursing Officer provide adequate
protection against loss of funds.
Cash Shortages
As soon as a cash shortage has been definitely established

(please refer to the topic Specific Guidelines on Cash
Shortage/Overage), the examiner concerned shall accomplish
the following certificate:
Date__________
I hereby certify that in the examination of the

cash and accounts of (Name of AO) of (Name of
Agency) on (Date of examination) a shortage
was reported which remains unaccounted for and
unrestituted.
I further certify that I have verified the shortage

to be in the total amount of P------------ (Indicate the
shortages by funds).
---------------------
Examiner

COMMISSION ON AUDIT
Four copies of the foregoing certificate shall be accomplished

and distributed, as follows: the original copy to the Chief
Accountant/local Treasurer concerned, one copy each to the
agency head and the defaulting accountable officer and the last
copy shall be retained for file by the auditor. (GAO General
Circular No. 87).
Cash shortage discovered is recorded only upon receipt of the

Cash Examination Report (CER) from the auditor who
performed said examination.
1. Discovery of the shortage:

Due from Officers and Employees 10.00
Cash-Disbursing/Collecting Officer 10.00
2. Restitution of the shortage:

Cash-Collecting Officer 10.00
Due from Officers and Employees 10.00
In case a request for relief is made by the AO, the first entry will
still be used. The credit to the Due from Officers and Employees
will be taken up when restitution is made if request is denied.
Adjustment is made when request is approved. The adjustment
may be to prior year or current year adjustment depending on
the period of the shortage.
Cash Overage
Cash examinations do not always show a shortage. Some may

show that the accounts are in order and some may reveal
overages. A cash overage should not be dismissed easily. It may
be an indication of irregularity.
If the overage cannot be satisfactorily explained by the

accountable officer, the amount shall be forfeited in favor of the
government and an OR shall be issued for the amount by the
collecting officer.

COMMISSION ON AUDIT

Miscellaneous Operating and Service 10.00
Income
Dishonored Checks
Recall that upon receipt of the Debit Memorandum and
dishonored check from the treasury or bank, the Collecting
Officer shall indicate on the OR in his/her file the cancellation
due to the dishonor. He/She shall prepare a list of the dishonored
checks.
Based on the List of Dishonored Check the Accountant shall
issue the necessary JEV. (Please refer also to Chapter 1 on the
process of taking up dishonored checks.)
If the original entries for the check dishonored are:
Upon collection:
Income
Remitted to the Bu of the Treasury:

Income
Or Deposited in Bank:
Cash in Bank-Local Currency ,Current 12.00
Account
The entry upon receipt of the notice of dishonor:

Cash-Collecting Officer or Cash in 12.00
Bank-Local Currency

COMMISSION ON AUDIT
Income
Set up the receivable account
Accounts Receivable* 12.00

*or other appropriate receivable account
SPECIFIC GUIDELINES FOR CASH

SHORTAGE/OVERAGE
Cash Shortages
1. Should the examination disclose cash shortages, the

examiner shall not immediately make any announcement,
notice or report until all arithmetical and mathematical
computations are rechecked and documents reviewed.
2. The examiner shall prepare the report on the shortage after

completion of the examination: when all amounts and
computations have been reviewed and after the
reconciliation of related accounts and the verifications of all
transactions.
3. He/She shall issue a demand letter to the AO for the

immediate restitution of the shortage (for sample refer to
Appendix 10).
4. Within seventy two (72) hours upon receipt of demand

letter, the examiner shall obtain from the AO a written
explanation of the shortage.
5. Upon failure by the AO to immediately restitute the

amount, the examiner shall recommend to the agency head in
writing for the immediate relief of the AO from his/her
duties. The letter – recommendation should be duly
acknowledged by the agency head or his/her authorized
representative. The acknowledgement shall form part of the
examiner’s working paper.

COMMISSION ON AUDIT
6. The examiner shall see to it that all cash and records

pertaining to the account are adequately safeguarded.
7. He/She shall submit an interim or advance report to the

appropriate COA official in case there will be a delay in the
completion of the report.
8. He/She shall direct the proper officer to withhold the

payment of any money due the AO, except retirement pay or
gratuity due her/him, as soon as the cash shortage is
ascertained and is not contested. Please refer to Appendix 11
for sample copy of the withholding order. The amount
withheld shall be applied to the shortage pursuant to Section
73, PD 1445. The examiner shall report the ordering of the
withholding to the COA Chairman immediately.
9. In the case of a local treasurer, the treasurer shall seize the

office and its contents and shall notify the COA and the local
chief executive. He/She shall immediately take full
possession of the office and its contents, close and render
his/her accounts at the date of taking possession and
temporarily continue the public business of the office. The
auditor who takes possession of the office of the local
treasurer shall ipso facto supersede the local treasurer until
the officer involved is restored, or other provision has been
lawfully made for filling the office. (Sec. 46, PD 1445).
10. The examiner shall submit his/her report to the RCD/CD.

The latter shall review it and forward to the RLAO/LAO.
(The Report shall be submitted to RLAO/LAO for shortages
and overages)
11. If the shortage is material, the examiner shall request thru

the Chairman, the Department of Foreign Affairs, the
National Bureau of Investigation, the Commission on
Immigration and Deportation and the National Intelligence
and Security Agency that no clearance for purposes of travel
abroad should be issued to erring AO and that/he/she be
included in the hold order list unless cleared by COA.

COMMISSION ON AUDIT
Cash Overage
1. Review all figures, mathematical computations and

documents. Check if the overage is not due to a shortage
especially if the AO does both collection and disbursement.
2. Issue the OR in favor of the government as soon as the

overage is definitely established.
Summary
We discussed the procedures and techniques you can follow in

the conduct of the examination of the cash and accounts of the
collecting and/or disbursing officer. To further guide you in your
work, we discussed the details of the five (5) steps in the
examination of the cash and accounts of the collecting and the
disbursing officer. And so you will know what to do in case of
an overage and/or shortage in cash, we discussed specific
guidelines for such situations.

COMMISSION ON AUDIT

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CH 3.0-CONDUCT THE CASH EXAMINATION

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Handbook on Cash Examination- Chapter 3 70

 Enumerate some common procedures and techniques

COMMON PROCEDURES AND TECHNIQUES IN CASH

November 2002 Professional Development Center (PDC)

techniques (Please refer to next topic for the detailed

1. Introduce yourself properly to the accountable officer to be

2. Require the accountable officer to temporarily suspend all

3. Cause the production of all cash, cash items, etc., by

4. See to it that all cash, treasury warrants, checks, money

5. Instruct the accountable officer to update his/her cashbook,

“I hereby certify on my official oath that cash

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However, if the transactions to be recorded are quite

6. Require the AO to segregate private and/or personal funds,

7. Establish proper cut-off by (a) taking note of the last

8. Require the AO to segregate by denomination the bills and

9. Segregate the cash items by group, such as cash in pay

10. Immediately after establishing the accountability of the

For LGUs, reconciliation of the depository account of the

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shall be made using the format shown in Appendix 9,

11. If the examination discloses a shortage or an overage in

12. Evaluate the adequacy of the control measures adopted in

13. Assess the control weaknesses to determine if they are

14. Accomplish the auditor’s certificate on the cashbook.

15. Review all necessary working papers. Prepare the

DETAILED STEPS IN THE CONDUCT OF CASH

The following are the major steps in the conduct of cash

1. Count Cash, Cash Items and Take Inventory of

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Count Cash, Cash Items and Take Inventory of Accountable

1. Examine all checks, money orders and treasury warrants

2. Ascertain that private checks are made payable to the

Disallow the following cash items:

3. Count and list all unused/unsold accountable forms on

4. After the count of cash, cash items and accountable forms,

5. Check all entries in the cashbook from the date of last

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5.1 Check individually the entries in the cashbook during

5.2 Pay particular attention to the nature of collections

5.3 Check the numerical sequence of ORs issued.

5.4 Scrutinize the deposit slips for signs of tampering.

5.5 Check the footings of the cashbook to ascertain the

5.6 Consider all discrepancies affecting the CO’s

1. Examine all cash items for regularity. See to it that they

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1.1 Unrecorded paid vouchers or payrolls.

Determine why the paid vouchers/payrolls are not

1.2 Cash in pay envelopes

Verify contents of pay envelopes for partially paid

1.3 Checks, warrants and money orders

Disallow the encashment of checks, warrants and

1.4 Paid invoices, Reimbursement Expense Receipt, Vales,

If the cash advance examined is for petty expenses,

2. Count and list all unused checks and warrants on hand

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check, require the DO to explain the loss in writing. See to it

3. Require the DO to accomplish the required certificate in GF

4. Check all entries in the cashbook from the date of last

4.1 Based on the accounting records, determine whether all

4.2 Check all disbursement against the corresponding

4.3 Trace refunds of cash advances to the original official

4.4 Determine propriety and correctness of the