SOLVED

29) If internal controls over cash-related transactions are adequate, the auditor is justified in reducing the audit tests for the year-end bank reconciliation. A) True B) False 30) Many of the auditor’s audit procedures in the audit of cash center around the client’s bank confirmations. A) True B) False 31) Tracing outstanding checks to subsequent period bank statements tests the cutoff audit objective. A) True B) False 32) When auditing the year-end cash balance, one of the areas of focus is on the accuracy objective. A) True B) False 33) The auditor must extend the audit procedures in the audit of year-end cash when there are inadequate internal controls. A) True B) False 34) The three most important audit objectives for cash are accuracy, existence, and classification. A) True B) False 35) The starting point for the verification of the balance in the general bank account is to obtain a bank cut-off statement. A) True B) False 36) When auditing the general cash account, receipt of a standard bank confirmation is the starting point for verifying the company’s general cash account balance. A) True B) False 37) To test the client’s list of outstanding checks on the bank reconciliation for completeness, the auditor should trace from the list to the checks included with the cutoff bank statement. A) True B) False 38) The client may mail the bank confirmation requests if the auditor believes doing so will increase the likelihood that the confirmation will be returned promptly. A) True B) False 39) Auditors usually design bank confirmations that address the client’s specific circumstances. A) True B) False 40) Ordinarily, all deposits-in-transit listed on the year-end bank reconciliation should appear as deposits on the cutoff bank statement. A) True B) False 41) Auditors are not always required to obtain bank confirmations. A) True B) False 42) If an unusually large portion of the checks listed as outstanding on the year-end bank reconciliation have not cleared the bank by the cutoff date, one possible cause could be that kiting is occurring. A) True B) False