EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
expand_more
expand_more
format_list_bulleted
Question
Chapter 23, Problem 5RQ
To determine
Identify the need for practice stated by auditors “In confirming bank accounts, I insist upon a response from every bank the client has done business with in the past 2 years, even though the account may be closed at the balance-sheet date.”
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A1)
Which of the following would the auditor most likely perform when auditing the bank reconciliation for a December 31 year-end audit?
a. Confirm the audit client’s book balance shown on the bank reconciliation directly with the bank.
b. Verify the audit client’s book balance shown on the bank reconciliation to the Cash balance in the audit client’s trial balance and general ledger.
c. Subtract the outstanding check amounts from the audit client’s book balance.
d. Verify the deposits in transit amounts to the audit client’s December bank statement.
When an auditor sends out bank confirmations at the year-end audit, they are performing a(n)
O analytical procedure.
O test of the details of balances.
O key item test.
O test of the details of transactions.
In the audit of a client with a fiscal year ending December 31, the CPAs obtain a January 10 bank statement directly from the bank. Explain how this cutoff bank statement will be used
a. In the review of the December 31 bank reconciliation.b. To obtain other audit information.
Chapter 23 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 23 - Explain the relationships among the initial...Ch. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQ
Ch. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14.1MCQCh. 23 - Prob. 14.2MCQCh. 23 - Prob. 14.3MCQCh. 23 - Prob. 15.1MCQCh. 23 - Prob. 15.2MCQCh. 23 - Prob. 15.3MCQCh. 23 - Prob. 16.1MCQCh. 23 - Prob. 16.2MCQCh. 23 - Prob. 16.3MCQCh. 23 - Prob. 17DQPCh. 23 - Prob. 18DQPCh. 23 - Prob. 19DQPCh. 23 - Prob. 20DQPCh. 23 - Prob. 21DQPCh. 23 - You are doing the first-year audit of Sherman...Ch. 23 - Prob. 23DQPCh. 23 - McNeil Company, a medium-sized manufacturer of...Ch. 23 - The amount of subjectivity involved in...
Knowledge Booster
Similar questions
- The bank reconciliation revealed that one deposit had cleared the bank two weeks after the date of the deposit. Should this be of concern? Why, or why not?arrow_forwardThe auditor has gathered the following information to test the accuracy of the one prepared by the controller. In particular, the auditor is testing the accuracy of the outstanding cheques. Use the following information to prepare the bank reconciliation and calculate what the total of the outstanding cheques should be. 1. Cash balance - March 31 $39,500 2. Outstanding Deposits $13,810 3. NSF cheque from a customer $750 4. Bank Statement Balance - March 31 $127,100 5. The bank recorded a deposit as $10,000 when the deposit was actually $1,000 6. The bank credited the company's bank account with $3,900 of interest earned 7. The bank statement showed an EFT from a customer for $16,300 8. The bank charged a service charge of $45 9. The company posted cheque #1730 as $890 when the actual amount was properly debited by the bank for $980 a) Outstanding Cheques= $73,095 b) Outstanding Cheques= $76,995 c) Outstanding Cheques=$82,095 d) Outstanding Cheques= $56,795arrow_forward"The current month's bank statement for your account arrives in the mail. In reviewing the statement, you notice a deposit listed for $400 that you did not make. It has been credited in error to your account. Discuss whether you have an ethical or legal obligation to inform the bank of the error. What action should you take?" Thoroughly discuss the pros and cons of what the results would be if you reported it versus not reporting it. Be sure to tell what option you would choose and explain why."arrow_forward
- 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 contingent liabilities and security agreements D. Provide the data necessary to prepare proof of cash 2. As one of the year-end audit procedures , the auditor instructed the client’s personnel to prepare a standard bank confirmation request for a bank account that had been closed during the year. After the client’s treasurer had signed the request , it was mailed by the assistant treasurer. What is the major flaw in this audit procedure? 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…arrow_forwardAuditors typically will find the items lettered A–F in a client-prepared bank reconciliation. Check the below image for client-prepared bank reconciliation - Required:Assume these facts: On October 11, the auditor received a cutoff bank statement dated October 7. The September 30 deposit in transit; the outstanding checks 1281, 1285, 1289, and 1292; and the correction of the bank error regarding check 1282 appeared on the cutoff bank statement.a. For each of the preceding lettered items A–F, select one or more of the following procedures 1–10 that you believe the auditor should perform to obtain evidence about the item. These procedures may be selected once, more than once, or not at all. Be prepared to explain the reasons for your choices.1. Trace to cash receipts journal.2. Trace to cash disbursements journal. 3. Compare to the September 30 general ledger.4. Confirm directly with the bank.5. Inspect bank credit memo.6. Inspect bank debit memo.7. Ascertain reason for unusual delay, if…arrow_forwardChoose the one correct answer. Which of the following is not an appropriate question in an ICQ? *Are official receipts prepared by the cashier and issued to customers for all cash sales? Are collections deposited intact by the company's accountant? Does the internal auditor prepares bank reconciliation on a monthly basis? Is there a person in charge of comparing the official receipts and daily collection report?arrow_forward
- 4. The starting point for the verification of the balance in the general bank account is to obtain: A. The client’s year-end bank statement B. The client’s cash account from the general ledger C. A bank reconciliation from the client D. A cutoff bank statement directly form the bank 5. Which of the following substantive audit procedures is most likely to be performed by the auditor to gather evidence in support of the balance per bank ? A. Compare to general ledger B. Trace to cash receipts journal C. Confirm directly to bank D. Trace items on the cut-off bank statement to bank reconciliationarrow_forwardWhich procedure is an auditor most likely to use to detect a check outstanding at year-end that was not recorded as outstanding on the year-end bank reconciliation? Multiple Choice Prepare a bank transfer schedule using the client's cash receipts and cash disbursements journal. Receive a cutoff bank statement directly from the client's bank. Prepare a four column bank reconciliation using the year-end bank statement. Confirm the year-end balance using the standard form to confirm account balance information with financial institutions. MacBook Ainarrow_forwardYour client has requested that you assist them in setting up their accounting system and asks that you provide a brief description of what key systems and controls are required to ensure that they produce an accurate set of monthly reports. The client has specifically requested that you include in your comments: the accrual system of accounts preperation, the bank reconciliation, the use of accounting journals, the double entry system and the type of reports to be produced.arrow_forward
- The starting point for the verification of the balance in the general ledger account is to obtain a. A bank reconciliation from the client b. The client’s cash account from the general ledger c. A cutoff bank statement directly from the bank d. The client’s year-end bank statementarrow_forwardPlease help me with this problem. Answer requirement (a) and (b). During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client: Balance per 12/31 bank statement: $97,468 Add: Deposits in transit: $8,934 Total $106,402 Less: Checks Outstanding $41,516 Balance Per Ledger, 12/31 $64,886 According to the client’s accounting records, checks totaling $62, 964 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $100,880. Of the checks outstanding at December 31, checks totaling $7,200 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $16,400 were not returned. Required: a. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2)…arrow_forwardBank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor's records and to identify bank errors. Adjustments on the part of depositor should recorded for a. outstanding checks and deposits in transit b. Bank error, outstanding checks, and deposits in transit c. Book errors, bank errors, deposits in transit, and outstanding checks d. all items except bank errors, outstanding checks, and deposits in transit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College