Deck 12 Flashcards Preview

Audit > Deck 12 > Flashcards

Flashcards in Deck 12 Deck (20):
1

Check Kiting

Occurs when a check drawn on one bank is deposited in another bank and no record is made of the disbursement in the balance of the first bank. May result in high level of deposits with a low average balance

2

Immediately upon receiving checks from customers by mail, what must be done?

An employee must prepare a duplicate listing of the checks

3

The objective of auditing procedures applied to segment information is to provide the auditor with a reasonable basis for concluding whether:

The information is presented in conformity with the GAAP rules on segment information

4

Good internal control for cash includes:

The separation of cash handling, record keeping, and reconciliation of bank statements

5

Proper authorization for sales involves:

Obtaining credit approval before filling the order

6

Separation of duties between billing and cash receipts relates to:

Prevention of theft of cash

7

What is included in a security count worksheet?

- Record the details of the account
- An acknowledgment by a client representative that the securities were returned intact

8

If a client uses a stock transfer agent, confirmations should be used to provide evidence of:

Shares authorized, issued, and outstanding, as well as to provide evidence of the individual transactions.

9

Investment income from dividends is generally recalculated by

Comparing recorded income with dividend record books produced by investment advisory services such as "Moody's Dividend Record"

10

The auditor reviews repair and maintenance expense accounts to test for:

Completeness of asset additions

11

Reasonableness test

Data in two or more fields are checked for consistency

12

Where is the remittance list sent?

Forwarded to the cashier and have a copy sent to the accounts receivable clerk to update the subsidiary accounts receivable records

13

Lapping

An employee uses current remittances to conceal remittances that have been stolen previously

14

What department matches the receiving report, purchase order, and vendor invoice?

The accounts payable department

15

Blank confirmations should be used if:

Recipients are likely to sign other positive confirmations without careful investigation

16

Three elements of Segregation of duties

A: authority
R: record keeping
C: custody

17

What assertion does credit approval deal with?

Valuation

18

What kind of function is credit approval?

Authority

19

What kind of function is shipping?

Custody

20

What kind of function is billing and accounting?

Record keeping