Cash Cycle M3

Question 1

Primary purpose of sending a standard request to financial institutions

Answer 1

Corroborate information regarding deposit and loan balance

Question 2

Auditor identifies contingent liabilities

Answer 2

By obtaining standard bank confirmation

Question 3

Auditor sends confirmation to all banks regardless of year-end balance

Answer 3

To sick info regarding contingent liability and security agreement

Question 4

The primary evidence regarding year end cash balances in FS

Answer 4

Bank rec

Question 5

Receiving client’s Bank cut off statement auditor trace

Answer 5

Prior year checks listed in the cut off statement to the year end outstanding checklist

Question 6

Which set auditor confirm on one form

Answer 6

Cash in bank and collateral in loans

Question 7

Usefulness of standard bank confirmation request limited because of employee be

Answer 7

Unaware of all financial relationships bank has with cient

Question 8

For the effective Internal Control bank statements should be received from bank directly and

Answer 8

Reviewed by Internal Auditor

Question 9

Auditor traces bank transfers for the last part of audit period and subsequent period

Answer 9

To detect kiting

Question 10

Auditing client’s year end cash balance auditor uses standard bank confirmations and performs test on clients year end reconciliation for what assertion?

Answer 10

Completeness, valuation, allowance

Question 11

Auditor tests completion assertion on presentation and disclosure of cash. Which is not a requiring disclosure? in footnotes

Answer 11

A balance breakdown between petty cash and short term investments