Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 8, Problem 9RQ
To determine
List the information in a mortgage that is likely to be relevant to the auditor.
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3. In the audit of loans payable, which of the following audit procedure would be most likely performed to validate the existence assertion?
Group of answer choices
a. Review loan contracts
b. Sending loan confirmations
c. Vouching of subsequent payments of loans
d. Performing analytical procedures
4. You are auditing the December 31, 2021, accounts payable balance of one of your firm’s divisions. The division controller’s office has provided you with a schedule listing the creditors and the amount owed to each at December 31, 2021. Which of the following audit procedures would be your best choice for determining that no individual account payable has been omitted from the schedule?
Group of answer choices
a. Send confirmation requests to a randomly selected sample of creditors listed on the schedule
b. Examine support for selected 2022 payments to creditors, ascertaining that those relating to 2022 are not on the schedule.
c. Send confirmation requests to creditors that…
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 PNB'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 estimateb. Record it on the summary of audit differences.c. Propose an adjustment.
Michaela and Dave are working on the audit of Rainbow Enterprises, LLC and have been tasked with confirming the client's bank
deposit and, loan balances. As Dave and Michaela prepare to do this, which of the following items would be prudent for the pair to
check? (Select all that apply.)
Details of any pledged property or other assets that the bank is holding for other similar customers.
Details of any loans, including repayment terms and interest charged by the bank.
Details of any contingent liabilities held by the client that the bank has assumed legal and financial responsibility for.
Dave and Michaela should consider requesting a full listing of all bank accounts that have been opened and closed during
the year.
Chapter 8 Solutions
Auditing And Assurance Services
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 11RQ
Ch. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 15RQCh. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23.1MCQCh. 8 - Prob. 23.2MCQCh. 8 - Prob. 23.3MCQCh. 8 - Prob. 24.1MCQCh. 8 - Prob. 24.2MCQCh. 8 - Prob. 24.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Prob. 27DQPCh. 8 - Prob. 28DQPCh. 8 - Prob. 32DQPCh. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQP
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Similar questions
- You are an audit manager at Foyer & Associates and have been assigned to the audit of Modern Electrical Limited (MEL) for the year ending 30 June 2021. During the planning stage of the audit, you become aware of the following matters: a.MEL has significant loans from its bank. The bank has Indicated that it is concerned about MEL'S ability to meet specific loan covenants, particularly the return on total assets (net b. The aped trade accounts receivable listing indicates that the percentage of accounts receivable exceeding 90 days has jumped from 15 per cent to 37.5 per cent during the last 12 months. The credit manager hasindicated that the is because some of MEL'S Customers are currently'experiencing financial difficulty. This question.includos Part A and B part- a for each of the following scenerio describe briefly how this matter is a fraud audit risk factor in relation to mel's financial report.arrow_forwardIn the audit of loans payable, which of the following audit procedure would be most likely performed to validate the existence assertion? Group of answer choices A. Vouching of subsequent payments of loans B. Sending loan confirmations C. Performing analytical procedures D. Review loan contractsarrow_forwardThe auditors should insist that a representative of the client be present during the inspection and count of securities toa. Lend authority to the auditors’ directives.b. Detect forged securities.c. Coordinate the return of all securities to proper locations.d. Acknowledge the receipt of securities returned.arrow_forward
- Which of the following types of documentary evidence should the auditor consider the most reliable?a. Sales invoice created by the client with the support of proof of delivery from an outside delivery serviceb. Confirmation of debt balances sent and returned directly to the auditorc. Check made by the company and includes a sign of approval of the party receiving the money, which is included in the bank statement sent directly to the auditord. An audit list prepared by the client controller and reviewed by the client treasurer.arrow_forwardDuring the review of loan contracts and agreements, the auditor would most likely figure out the following, except: Choices Related disclosures pertaining to assets pledged as collateral. The accuracy of interest expense recorded by the entity. The existence of loans. The completeness of loans.arrow_forwardDuring 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 occurrenceb. Valuation or allocationc. Cutoffd. 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?…arrow_forward
- As a financial auditor who is auditing long-lived assets, from the income statement, describe two accounts that become your concern and require further examination? Explain why it becomes your concern and explain what kinds of audit procedures you will use in order to further examination of that account?arrow_forwardYour client portfolio as an audit manager at CC & Co also includes TT Co which is a listed financial institution offering loans and credit facilities to both commercial and retail customers. You have received an email from the audit supervisor who is currently supervising interim testing on systems and controls in relation to the audit for the year ending 31 October 2018. The email gives the following details for your consideration: One of the audit team members, Jones, has provisionally agreed to take out a loan with Thomas Co to finance the purchase of a domestic residence. The loan will be secured on the property and the client’s business manager has promised Jones that he will ensure that she gets ‘the very best deal which the bank can offer.’ The payroll manager at TT Co has asked the audit supervisor if it would be possible for CC & Co to provide a member of staff on secondment to work in the payroll department. The payroll manager has struggled to recruit a new…arrow_forwardDuring the review of loan contracts and agreements, the auditor would most likely figure out the following, except: A. The existence of loans. B. The completeness of loans. C. Related disclosures pertaining to assets pledged as collateral. D. The accuracy of interest expense recorded by the entity.arrow_forward
- When auditing contingent liabilities, which of the following procedures would be MOST effective? a. Reviewing the allowance for doubtful accounts. b. Reviewing the bank cutoff statement. c. Examining customer confirmation replies. d. Examining invoices for repairs expense. e. Abstracting the minutes of the board of directors.arrow_forwardAnalyze the risks associated with auditing accounts payable. Explain the process of auditing accounts payable using confirmations. Determine why third parties are important to the audit of debt and equity. How do auditors interact with third parties to gain audit evidence when auditing debt and equity? Why is it important that auditors determine if the client is complying with debt provisions?arrow_forwardIn connection with the audit of an issue of long-term bonds payable, the audit team shoulda. Determine whether bondholders are persons other than owners, directors, or officers of the company issuing the bond.b. Calculate the effective interest rate to see whether it is substantially the same as the rates charged for similar issues.c. Decide whether the bond issue was made without violating state or local laws or regulations.d. Ascertain that the client has obtained the opinion of counsel on the legality of the issue.arrow_forward
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