Why is posting bank activity a control risk if the bank statement already shows what happened?

Author: AcadiFi Team

• Related Article: cpa-cash-controls-segregation-duties-audit-evidence
• Related QB: bank-reconciliation-review-control

Answer draft:

The bank statement shows cash movement, but it does not prove the accounting classification, business purpose, authorization, or completeness of the related records. A payment may clear the bank and still be unauthorized, recorded to the wrong vendor, posted to an expense instead of a receivable, or omitted from a suspense-clearing process.

That is why the reconciliation and review matter. A preparer can match the bank line to the general ledger. An independent reviewer should ask whether the payment was approved, whether the payee and bank account are valid, whether the entry belongs in the period, and whether unusual items were investigated. The CPA Exam often turns on that difference between matching and reviewing.