1. An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure to A. request a cutoff bank statements and related checks be sent to the auditor B. Detect
MULTIPLE CHOICE:
1. An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure to
A. request a cutoff bank statements and related checks be sent to the auditor
B. Detect kiting activities that may otherwise not be discovered
C. Seek information about
D. Provide the data necessary to prepare proof of cash
2. As one of the year-end
A. The request was mailed by the assistant treasurer
B. The CPA did not sign the confirmation request before it was mailed
C. Sending the request was meaningless because the account was closed before year-end
D. The confirmation request was signed by the treasurer
3. The usefulness of the standard bank confirmation request maybe limited because the bank employee who completes the form may :
A. Not believe that the bank is obligated to verify confidential information to a third party
B. Be unaware of all the financial relationships that the bank has with the client
C. Sign and return the form without inspecting the accuracy of the client’s bank reconciliations
D. Not have access to the client’s cutoff bank statement
4. An auditor who is engaged to examine the financial statements of a business entity will request cutoff bank statement primarily in order to:
A. Detect lapping
B. Detect kiting
C. Verify reconciling items on the client’s bank reconciliation
D. Verify the cash balance reported on the bank confirmation inquiry form
5. Which of the following auditing procedures would the auditor not apply to a cutoff bank statement?
A. Trace year end outstanding checks and deposits in transit to the cutoff bank statement
B. Reconcile the bank account as of the end of the cutoff period
C. Compare dates, payees and endorsements on returned checks with the cash disbursements record
D. Determine that the year-end deposit in transit was credited by the bank on the first working day of the following accounting period.
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