What it is
A proof of cash reconciles four things for one account and one month: the opening balance, the receipts, the disbursements and the closing balance. The bank side and the book side are each adjusted to the same figures. Where an ordinary bank reconciliation proves only the closing balance, the proof of cash also tests that every recorded receipt reached the bank, every recorded disbursement cleared it, and nothing was shifted from one month to the next.
The workbook takes deposits in transit and outstanding checks at both ends of the month from one Setup tab and moves each to the right column automatically, so the adjusted columns cannot be keyed inconsistently. Free entries cover bank errors, charges, returned items and anything else, and four foot checks and a difference row show whether the proof closes.
When to use it
- Cash controls are weak, or fraud risk calls for tracing receipts and disbursements rather than the closing balance only.
- A bank reconciliation looks right but you suspect kiting, lapping or unrecorded transactions.
- Review of a small entity’s cash where the owner handles deposits and payments.
What’s inside
- Setup tab for period dates and the four cutoff items
- Bank side: per statement, deposits in transit, outstanding checks, other reconciling items, adjusted bank
- Book side: per books, unrecorded bank items, errors, adjusted books
- Difference row by column with a Proved or Not proved result
- Foot checks on the statement, the books and both adjusted columns
Standard cited
This template follows AU-C 330. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
How do deposits in transit and outstanding checks move between columns?
Deposits in transit are added to the opening and closing balances, the beginning amount comes out of receipts and the ending amount goes in. Outstanding checks are deducted from the opening and closing balances, the beginning amount comes out of disbursements and the ending amount goes in. The sheet applies these from Setup.
What does a difference in only one column mean?
It usually points to a cutoff or classification problem: an item recorded in one month in the books and the next month at the bank, or a deposit or check counted in the wrong column. A difference in every column usually means an unrecorded item.
Do I include transfers between my own accounts?
Yes, in receipts and disbursements on both sides. Look for a transfer that left one account in the month and reached the other after month end; that pattern is how kiting between accounts hides.
Is a proof of cash required in an audit?
No standard requires one for every audit. The auditor decides the extent of work on cash from the risk assessment. A proof of cash is a way to respond when cash controls are weak or fraud risk is elevated.
Related templates
- Bank Reconciliation Template (Excel)
- Bank Confirmation Letter (AU-C 505)
- Audit Program: Cash and Bank
- Cutoff Testing Workpaper (Sales, Purchases, Inventory)
Last updated 11/05/2026. All free templates.