During the audit of Albert Eistein, what relevant assertion should be used to record loans receivable net of an allowance for loan losses when allowance should adequately cover any estimated losses inherent in the loan portfolio but not excessive losses? a. Existence or occurrence b. Valuation or allocation c. Cutoff d. Rights or obligations
During the audit of Albert Eistein, what relevant assertion should be used to record loans receivable net of an allowance for loan losses when allowance should adequately cover any estimated losses inherent in the loan portfolio but not excessive losses?
a. Existence or occurrence
b. Valuation or allocation
c. Cutoff
d. Rights or obligations
Among the prescribed audit activities provided below, which of the following would effectively help Metro bank determine its proper allowance for loan losses?
a. Make visits to the borrower's commercial business site periodically.
b. Have procedures in place to identify problem loans in a timely fashion.
c. Identify any weaknesses in the institution's lending process.
d. Obtain additional collateral for a loan.
When assessing the reasonableness of Metro Bank's allowance for loan losses as a whole, you discovered that his estimate differs from the recorded allowance and that the difference is immaterial. How should you address this finding in your audit?
a. Reconsider the precision of his estimate
b. Record it on the summary of audit differences.
c. Propose an adjustment.
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