18 Questions
What considerations should an auditor make before using the work of another auditor?
Independence and competence of the other auditors
Which phase of the audit process may be helpful in identifying related party transactions?
Planning phase
According to PSA 570, what does the auditor consider regarding the bank's ability to continue as a going concern?
Events or conditions that may cast significant doubt
What event could indicate significant doubt on a bank's ability to continue as a going concern?
Increased amounts due to central banks
In the context of external auditors, what is a key aspect related to accreditation?
Total assets criteria for external auditors
When considering the work of another auditor, what evidence should the auditor obtain about the adequacy of that work?
Sufficient appropriate audit evidence that the work done by the other auditor is adequate
What is necessary for a bank to have in order to reduce inherent and control risks to levels less than high?
A robust system of internal control
Why might relatively small misstatements have a significant impact on banks with high leverage?
Due to the effect on capital and financial results
What factor might call into question the appropriateness of management's use of the going concern assumption in a bank?
Breach of regulatory capital requirements
Why is it often necessary for auditors to use the work of other auditors in different locations where a bank operates?
Wide geographic dispersion of bank offices
What consideration guides an auditor in assessing materiality for a bank audit, especially with high leverage?
$\text{Effect on capital and financial results}$
Why do relatively small misstatements in a bank become significant despite their size?
$\text{Impact on capital and period results}$
What is solvency risk in banking?
The risk of loss arising from the bank not having sufficient funds to meet its obligations.
What is transfer risk in banking?
The risk of loss arising from a counterparty's obligation not being denominated in their home currency.
What is a common risk banks may face regarding ownership?
Influence from owners affecting the allocation of credit.
What are examples of fraudulent activities that may occur within a bank?
Misappropriation of assets for personal gain without knowledge or complicity of employees.
How does closely held ownership in banks affect management?
Owners may significantly influence management, affecting independence and judgment.
Which type of risk involves a counterparty's obligation not being in their home currency?
Transfer risk
Learn about different types of risks in banking, such as solvency risk and transfer risk, and understand how they can impact financial institutions. Explore the concept of risks faced by banks in the financial sector.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
