The correct answer is: A. Ensure presence of somebody from management.
The auditor should ensure the presence of somebody from management when counting cash on hand to:
- Minimize the risk of fraud.
- Ensure that the count is conducted in a proper and orderly manner.
- Obtain confirmation that the cash counted is the same as the cash recorded in the accounting records.
Option B is incorrect because the auditor does not need to obtain a receipt from the custodian as to its return. The auditor can verify the return of cash by counting it and comparing it to the amount recorded in the accounting records.
Option C is incorrect because postage and revenue stamps are not considered cash. They are considered to be supplies and should be recorded as such in the accounting records.
Option D is incorrect because temporary advances to employees are not considered cash. They are considered to be receivables and should be recorded as such in the accounting records.