Chapter 23 Homework- ACCT 470

Chapter 23 Homework The following questions deal with auditing year-end cash and financial instruments. Choose the best response. A CPA obtains a January 10 cutoff bank statement for a client directly from the bank. Very few of the outstanding checks listed on the client's December 31 bank reconciliation cleared during the cutoff period. A probable cause for this is that the client transmitted the checks to the payees after year-end. In establishing the existence and ownership of an investment held by a corporation in the form of publicly traded stock, an auditor should inspect the securities or confirm the number of shares owned that are held by an independent custodian. The auditor should ordinarily send confirmation requests to all banks with which the client has conducted any business during the year, regardless of theyear-end balance, because the confirmation form also seeks information about indebtedness to the bank. The following questions deal with discovering fraud in auditing year-end cash. Choose the best response. The auditor should control and verify all liquid assets simultaneously to prevent conversion of assets to conceal a shortage. Which of the following is one of the better auditing techniques to detect kiting? Prepare a schedule of bank transfers from the client's books. Which of the following cash transfers results in a misstatement of cash at December 31, 2016? 1/4/17 1/5/17 12/31/16 1/4/17 The following questions concern auditing year-end ca