M3 Aregistered investment adviser has discretionary authority over client funds but does not take custody. Which of the following statements is true?A It does not need to prepare a balance sheet, but one must be available at the request of the AdministratorB it does not need to prepare a balance sheet but must be willing to open its books to the Administrator at any timeIt must prepare a balance sheet that must be filed with the Administrator, but it need not be auditedIt must prepare a balance sheet that must be filed with the Administrator, and it must be audited

The investment advisor recommended investment options and securities analysis is conducted by the…

Answered: It must prepare a balance sheet that…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Completing A Quality Audit

Section: Chapter Questions

Problem 15CYBK

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Similar questions

When a public accounting firm audits FUND-A in a mutual fund complex that has sisterfunds FUND-B and FUND-C, independence for the audit of FUND-A is not impaired whena. Managerial-level professionals located in the office where the engagement audit partneris located but who are not on the engagement team own shares in FUND-B, which is notan audit client.b. The wife of the FUND-A audit engagement partner owns shares in FUND-C (an auditclient of another of the firm’s offices), and these shares are held through the wife’semployee benefit plan funded by her employer, the AllSteelFence Company.c. Both (a) and (b).d. Neither (a) nor (b).
During your testing of controls over investments. You have noted that the acquisitionand disposals were approved by people coming from the accounting department.Which control is most likely violated? choices: Controls over incompatible dutiesControls over reporting of investmentsControls over the custody of investmentsNone of the choices.
Which of the following outcomes is NOT a desired outcome of a financial audit? Test internal controls Examine completeness of financial records Assess legality of transactions Evaluate public opinion of the budget
During your testing of controls over investments. You have noted that the acquisition and disposals were approved by people coming from the accounting department. Which control is most likely violated? Group of answer choices Controls over incompatible duties Controls over reporting of investments Controls over the custody of investments None of the choices.
You are the auditor of MasterFood. As a result of your audit work, you discover that MasterFood is currently trying to raise finance to fund operating activities. You believe that if the finance is not received, there is significant doubt over the going concern status of MasterFood. You conclude that the going concern assumption is appropriate, but you recommend that the financial statements should contain a note disclosing the cash flow problems faced by the company, a description of the finance being sought, and an evaluation of the going concern status of the company. The directors do not wish to include the note in the financial statements. Required: Explain the audit opinion which will be issued if: I. The directors refuse to include the disclosure note ii. the directors refuse to include the disclosure note
The following are functions of the treasurer rather than the controller, except a, credit managementb. tax managementc. sourcing and investing fundsd. risk managemente. answer not given
Which statement is not correct? A. The main objective (role) of financial intermediaries is to convert savings of SSU’s into investments. B. Financial intermediaries purchase financial claims with a set of characteristics from DSU’s and sell financial claims with characteristics tailored to the desires of the SSU’s. C. Financial intermediaries normally absorb the risks from SSU’s and manage the risks by investing the funds received from SSU’s into various securities. D. Financial intermediaries serve solely as intermediaries with the financial markets and never serve as investors. E. none of the above
If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall: i) Obtain sufficient appropriate audit evidence to determine whether or not a material uncertainty exists ii) Request management to make its assessment of the material uncertainty iii) Evaluate management’s plans for future actions in relation to its going concern assessment, whether management’s plans are feasible iv) Evaluate the reliability of the underlying cash flow data v) Request written representations from management regarding their plans A. i) ii) and iv) B. iii) iv) and v) C. ii) iii) and iv) D. i) ii) iii) iv) and v)
Dodson is preparing to meet with the controller of Charlemagne Co. to discuss the written representations the management of Charlemagne will provide as a part of an engagement to report on an examination of an investment portfolio to be distributed to Charlemagne's ownership. Charlemagne does not have any previously audited financial statements. Which section of the authoritative literature provides specific examples of matters that might appear in the representation letter that Dodson should consider discussing with the controller during this meeting? Enter response for Example: QC : 12. A34
Following are typical questions that might appear on an internal control questionnaire for investments in marketable securities. Is custody of investment securities maintained by an employee who does not maintain the detailed records of the securities? Are securities registered in the company name? Are investment activities reviewed by an investment committee of the board of directors? Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of control risk.
The treasury department maintains the custody over the company's investments. Both the accounting and treasury maintain its own records over investments. During the company's month end procedures, the person that should reconcile the investment records and the actual securities on hand should be: Group of answer choices The investment committee An independent person in the treasury department An independent person in the accounting department The accounting staff recording investment transactions
The following questions deal with assessing controlrisk in a financial statement audit. Choose the best response.a. When obtaining an understanding of an entity’s internal control procedures, anauditor should concentrate on the substance of procedures rather than their formbecause:(1) the procedures may be operating effectively but may not be documented.(2) management may establish appropriate procedures but not enforce compliancewith them.(3) the procedures may be so inappropriate that no reliance is contemplated by theauditor.(4) management may implement procedures whose costs exceeds their benefits

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