Which of the following is typically omitted with a comfort letter to an investment banking firm?
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- An auditor is establishing procedures for testing management’s assertions regarding existence in relation to reported investments in marketable securities. The auditor is considering using confirmations or observation. Which of these techniques would be appropriate for obtaining evidence about existence? A. Confirmations Only B. Observations Only C. Neither confirmations nor observations D. Both confirmations and observationsFollowing 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.In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? O Is access to investment securities restricted to at least two authorized officials? O Are the duties of authorization, custody, recording keeping and valuation of investment securities transactions segregated? O All of the choices. O Are investment securities acquisitions and disposals properly authorized by the board of directors?
- 1. A "comfort letter" to an investment banking firm will normally not: Group of answer choices a. Express negative assurance. b. Be included with the registration statement for the securities. c. Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts. c. Include a statement as to the auditors' independence.In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? a. Are investment securities acquisitions and disposals properly authorized by the board of directors? b. Is access to investment securities restricted to at least two authorized officials? c. All of the choices. d. Are the duties of authorization, custody, recording keeping and valuation of investment securities transactions segregated?What possible actions would an auditor might take if a client’s financial statements depart from GAAP. Would the demand for assurance services increase or decrease in the future?
- An auditor's primary substantive procedures for investments typically include confirmation of securities or evidence of ownership that are held by the client or by a third party. Which of the following assertion(s) is(are) addressed by the audit procedure previously mentioned? * A. I only B. I and V only C. II and V only D. I and VII onlyAlthough audit reports should provide assurance to investors and creditors that financial information presented is free of material misstatements and in accordance with GAAP, should audit reports be used to solicit investments, credit, or sales in a manner similar to Jim Bakker’s? How can a CPA firm prevent such behavior?Which of the following factors do NOT impact the auditor's decision on the mix of substantive procedures to be performed? O overall risk assessment for the client O nature of the account balance O management's opinion on the risk of the account balance O risk assessment for the specific account balance
- 23. In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? Group of answer choices Are the duties of authorization, custody, recording keeping and valuation of investment securities transactions segregated? Are investment securities acquisitions and disposals properly authorized by the board of directors? Is access to investment securities restricted to at least two authorized officials? All of the choices.Which of the following statements regarding auditors’ liability under the Securities Act of1933 is not true?a. The act relates to the initial issuance of securities to the public, normally through an initial public offering.b. Auditors’ liability arises because of audited financial information filed with the SEC.c. Third parties must demonstrate that they relied on misstated financial statements thatwere examined by auditors.d. Auditors may be liable if they are found to have engaged in ordinary negligence.What are the two requirements for the auditor to offer an unqualified opinion on internal financial reporting controls? What causes the auditor to offer a qualified or disclaimer opinion on internal control over financial reporting?
