| Brokers' advice | A notification sent by a stockbrokerage firm to a customer reporting the terms of a purchase or sale of securities.
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| Check Clearing for the 21st Century Act ("Check 21 Act") | This act allows financial institutions to create and process electronic "substitute checks" in place of customer written hardcopy checks. The purpose of this act is to decrease the time for check clearing.
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| Cutoff bank statement | A bank statement covering a specified number of business days (usually 7 to 10) after the client's balance sheet date. Auditors use this statement to determine that checks issued on or before the balance sheet date and paid during the cutoff period were listed as outstanding on the year-end bank reconciliation. Another use is to determine that reconciling items shown on the year-end bank reconciliation have cleared the bank within a reasonable amount of time.
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| Derivatives | Financial instruments that "derive" their value from other financial instruments, underlying assets, or indexes. Examples are options, forward contracts, and futures contracts.
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| Dividend record book | A reference book published monthly by investment advisory services reporting detailed information concerning all listed and many unlisted securities; includes dividend dates and amounts, current prices of securities, and other condensed financial data.
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| Electronic data interchange (EDI) | A computer network between companies that allows the interchange of data from one company's computer to the other's (e.g., allows purchases and sales between two firms to be processed electronically).
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| Electronic funds transfer (EFT) system | A computer system that transmits and processes fundsrelated cash disbursement and receipt transactions. Increasingly, companies are electronically transferring funds between bank accounts rather than issuing checks. See also electronic data interchange.
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| Kiting | Manipulations causing an amount of cash to be included simultaneously in the balance of two or more bank accounts. Kiting schemes are based on the float period—the time necessary for a check deposited in one bank to clear the bank on which it was drawn.
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| Lockbox | A post office box controlled by a company's bank at which cash remittances from customers are received. The bank picks up the remittances, immediately credits the cash to the company's bank account, and forwards the remittance advices to the company.
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| Proof of cash | An audit procedure that reconciles the bank's record of cash activity with the client's accounting records for a test period. The working paper used for the proof of cash is a four-column bank reconciliation.
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| Standard confirmation form | A confirmation form, agreed to by the AICPA, the American Bankers Association, and the Bank Administration Institute, that is designed to provide corroborating evidence about the client's account balances and outstanding loans.
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| Voucher | A document authorizing a cash disbursement. A voucher usually provides space for employees to initial after they have performed approval functions. (The term voucher may also be applied to the group of documents that support a cash disbursement.)
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| Voucher register | Aspecial journal used to record the liabilities for payment originating in a voucher system. The debit entries are the cost distribution of the transaction, and the credits areVouchers Payable. Every transaction recorded in a voucher register corresponds to a voucher authorizing future payment of cash.
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| Window dressing | Action taken by the client shortly before the balance sheet date to improve the financial picture presented in the financial statements.
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