ACCTG 5510 Exam with a grade of A+ and accurate answers available

Cash - Substantive - ANSReceipt of bank confirmations ◦ Not required for non-public entity audits; however, auditors usually obtain a direct receipt of a confirmation from every bank or other financial institutions ◦ Confirms usually verify loan information on the same form ◦ After auditors receive the completed bank confirmation, the confirmed balance should be traced to the amount stated on the bank reconciliation. ◦ Similarly, all other information on the reconciliation should be traced to the relevant audit schedules. ◦ Any differences are investigated and resolved. Cash - Substantive - ANSCut-off Procedures ◦ Cut-off bank statement (partial period statement or online access provided directly to CPA firm by bank) ◦ Review subsequent period bank statement ◦ Auditors use information in the cut-off/subsequent bank statement to verify the appropriateness of reconciling items on the bank rec Obtain a schedule of all transfers between banks for x days prior to and subsequent to reconciliation date (Completeness, Cut-off, Existence) - Why? - ANSKITING Majority of financial instruments are valued using ______________? - ANSFAIR VALUE ESTIMATES Financial Instruments - Overview - ANSFinancial Instruments are defined as: a tradable asset of any kind - such as, debt securities, equity securities, and derivative instruments Business risks associated with financial instruments will vary depending on the significance and aggressiveness of a company's investing activity. Risks will be higher for companies investing in less liquid securities or derivative financial instruments (financial services firms are exposed to greater risk due to the sheer volume of activity and types of instruments traded)