Exam 10: Cash and Financial Investments

As one of the year-end audit procedures,the auditor instructed the client's personnel to prepare a confirmation request for a bank account that had been closed during the year.After the client's treasurer has signed the request,it was mailed by the assistant treasurer.What is the major flaw in this audit procedure?

In many financial statements audits,auditing financial investments involves complex tasks requiring specialized skill and knowledge. a.List three audit tasks related to the audit of financial investments that may require specialized skill or knowledge. b.Define the term "financial derivative." c.List the two general purposes why a client might acquire a financial derivative.

Which of the following is one of the better auditing techniques that might be used by an auditor to detect kiting?

A company's decision to use the fair value option for valuation of marketable securities is most likely to affect which of the following assertions the most?

Contact with banks for the purpose of opening company bank accounts should normally be the responsibility of the corporate:

Which of the following is not a control that generally is established over cash receipts?

A compensating balance agreement always requires that cash be reclassified as a noncurrent asset.

The auditors should insist that a representative of the client be present during the physical examination of securities in order to:

For investments in securities accounted for by the equity method,the auditors are primarily concerned with verifying the fair value of the investments.

Which of the following statements is not correct?

In a manufacturing company which one of the following audit procedures would give the least assurance of the existence of the assets in the general ledger balance of investment in stocks and bonds at the audit date?

By preparing a four-column bank reconciliation ("proof of cash")at year-end,an auditor will generally be able to detect:

You are working on the Coleman audit.Assume that each of the four sections of this question are unrelated.Ashley Wilson,another staff member,has given you the following list of what she refers to as "internal control deficiencies" and has asked you to review each point and make sure that you agree that each is an internal control deficiency.

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the best evidence on operating effectiveness?

Which of the following procedures in the cash disbursements cycle should not be performed by the accounts payable department?

To gather evidence regarding the balance per bank in a bank reconciliation,an auditor could examine all of the following except:

Properly designed internal control will permit the same employee to:

Garcia was engaged to audit the financial statements of Delta Corporation for the year ended September 30,200X.Having completed an examination of the investment securities,which of the following is the best method of verifying the accuracy of recorded dividend income?

The auditors use a bank cutoff statement to compare:

Confirmations for cash balances should be mailed only to the financial institutions with which the client has a cash balance at year-end.