AUD 3 Internal Control 16 - 2 Operating Cycles - Investing and Financing Cycle Flashcards

Question

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment se______ies

Answer 1

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities

Answer 2

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity

Answer 3

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity

Answer 4

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity

Answer 5

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments.

Answer 6

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments.

Answer 7

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments.

Answer 8

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments. • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 9

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 10

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 11

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 12

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 13

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 14

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 15

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 16

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 17

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 18

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices. • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 19

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 20

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians

Answer 21

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians

Answer 22

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians

Answer 23

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians

Answer 24

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 25

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 26

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 27

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 28

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts. • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 29

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 30

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 31

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 32

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 33

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 34

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 35

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 36

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location

Answer 37

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 38

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 39

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 40

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 41

Investing and Financing Cycle Applying the RACE mnemonic for account balances: • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 42

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments. • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices. • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts. • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 43

Investing and Financing Cycle Applying the RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments. • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices. • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts. • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 44

Investing and Financing Cycle The procedures (of applying the RACE for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence ) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 45

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level,

Answer 46

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level,

Answer 47

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 48

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 49

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 50

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 51

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 52

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 53

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 54

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common.

Answer 55

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common.

Answer 56

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common.

Answer 57

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common.

Answer 58

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common.

Answer 59

Investing and Financing Cycle The procedures (applying RACE) will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 60

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities

Answer 61

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities

Answer 62

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities

Answer 63

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities

Answer 64

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities

Answer 65

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 66

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 67

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 68

Investing and Financing Cycle In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 69

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 70

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 71

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 72

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 73

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 74

Investing and Financing Cycle The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities. Requiring two officers to be involved in access is common. In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 75

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 76

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments,

Answer 77

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments,

Answer 78

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities,

Answer 79

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities,

Answer 80

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 81

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 82

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 83

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 84

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities.

Answer 85

Investing and Financing Cycle AU-C 501 presents guidance on auditing Derivative instruments, hedging activities, and investments in both debt and equity securities. Applicable accounting standards are in the FASB Codification, Topic 815, Derivatives and Hedging.

Answer 86

Investing and Financing Cycle Internal Controls Inherent risk associated with investments, particularly marketable securities, is generally high

Answer 87

Investing and Financing Cycle Internal Controls Inherent risk associated with investments, particularly marketable securities, is generally high,

Answer 88

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high,

Answer 89

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high,

Answer 90

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high,

Answer 91

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 92

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 93

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 94

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 95

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 96

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable.

Answer 97

Investing and Financing Cycle Internal Controls Inherent risk (IR) associated with investments, particularly marketable securities, is generally high, largely due to the fact that their value is readily determinable and they are frequently easily transferrable. Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 98

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Management’s investment objectives

Answer 99

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Management’s investment objectives

Answer 100

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument

Answer 101

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Complexity of the security or derivative instrument

Answer 102

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Complexity of the security or derivative instrument

Answer 103

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Complexity of the security or derivative instrument

Answer 104

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Complexity of the security or derivative instrument

Answer 105

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 106

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the transaction giving rise to the security involved cash

Answer 107

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the transaction giving rise to the security involved cash

Answer 108

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the transaction giving rise to the security involved cash

Answer 109

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 110

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 111

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 112

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 113

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 114

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 115

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 116

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 117

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 118

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash

Answer 119

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash • The entities with the security or derivative in question

Answer 120

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • The entities with the security or derivative in question

Answer 121

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • The entities with the security or derivative in question

Answer 122

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • The entities with the security or derivative in question

Answer 123

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 124

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 125

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 126

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 127

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 128

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 129

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Whether the derivative is stand-alone or an embedded feature of a separate agreement

Answer 130

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 131

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 132

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 133

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 134

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 135

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 136

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 137

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 138

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • External factors affecting management’s assertions such as credit, market and legal risks

Answer 139

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 140

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 141

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 142

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 143

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 144

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 145

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 146

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 147

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 148

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 149

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 150

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 151

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 152

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 153

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks

Answer 154

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks • Evolving GAAP with respect to derivatives and investments

Answer 155

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Evolving GAAP with respect to derivatives and investments

Answer 156

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Evolving GAAP with respect to derivatives and investments

Answer 157

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Evolving GAAP with respect to derivatives and investments

Answer 158

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Evolving GAAP with respect to derivatives and investments

Answer 159

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties

Answer 160

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Reliance on outside parties

Answer 161

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Reliance on outside parties

Answer 162

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Reliance on outside parties

Answer 163

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Reliance on outside parties * Assumptions about future conditions

Answer 164

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Assumptions about future conditions

Answer 165

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: • Assumptions about future conditions

Answer 166

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 167

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 168

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 169

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 170

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 171

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 172

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 173

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 174

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 175

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 176

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 177

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 178

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 179

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 180

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 181

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 182

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 183

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 184

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 185

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 186

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 187

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 188

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 189

Investing and Financing Cycle Internal Controls Inherent Risk Assessment (IR): Factors affecting inherent risk in this area include: * Management’s investment objectives * Complexity of the security or derivative instrument * Whether the transaction giving rise to the security involved cash * The entities with the security or derivative in question * Whether the derivative is stand-alone or an embedded feature of a separate agreement * External factors affecting management’s assertions such as credit, market and legal risks * Evolving GAAP with respect to derivatives and investments * Reliance on outside parties * Assumptions about future conditions

Answer 190

RACE (mnemonic for account balances) • R = Rights and obligations

Answer 191

RACE (mnemonic for account balances) • A = Allocation and Valuation

Answer 192

RACE (mnemonic for account balances) • C = Completeness

Answer 193

RACE (mnemonic for account balances) • E = Existence

Answer 194

RACE (mnemonic for account balances) • R = Rights and obligations

Answer 195

RACE (mnemonic for account balances) • A = Allocation and Valuation

Answer 196

RACE (mnemonic for account balances) • C = Completeness

Answer 197

RACE (mnemonic for account balances) • E = Existence

Answer 198

RACE (mnemonic for account balances) * R = Rights and obligations * A = Allocation and Valuation

Answer 199

RACE (mnemonic for account balances) * C = Completeness * E = Existence

Answer 200

Which assertion with regard to account balances support by the examples of controls in the following paragraph?

Answer 201

Which assertion with regard to account balances supported by the examples of controls below? (RACE) • Rights and obligations – Management examines investment securities to verify that they are registered in the name of the entity or confirms such with custodians of the investments.

Answer 202

Which assertion with regard to account balances supported by the examples of controls below? (RACE) • Allocation and Valuation – The recorded values of investments are periodically compared to current market prices.

Answer 203

Which assertion with regard to account balances supported by the examples of controls below? (RACE) • Completeness – The investments on hand and held by custodians are periodically reconciled to their recorded amounts.

Answer 204

Which assertion with regard to account balances supported by the examples of controls below? (RACE) • Existence – The entity maintains physical custody of investments in a secure physical location or they are maintained in the custody of a trustee, which can be confirmed.

Answer 205

Who will typically apply the control procedures (RACE)? Answer: Management or other employees at a very high level ----------- RACE mnemonic for account balances: * Rights and obligations * Allocation and Valuation * Completeness * Existence The procedures will typically be applied by management or other employees at a very high level, reflecting the extremely large value and great danger of fraud in connection with marketable securities.

Answer 206

Is it generally best to have an independent trustee maintain possession of securities for the company? Answer: Yes! ----- In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 207

Why it is generally best to have an independent trustee maintain possession of securities for the company? Answer: Because the securities can be safeguarded from all misappropriation by company employees. ----- In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 208

Who should maintain possession of securities so that the securities are safeguarded from all misappropriation by company employees? Answer: An independent trustee ------ In fact, it is generally best to have an independent trustee maintain possession of securities so that they are safeguarded from all misappropriation by company employees.

Answer 209