Check Kiting Audit Evidence Quiz
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Check Kiting Audit Evidence Quiz

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Questions and Answers

What is the best evidence an auditor could obtain to determine if check kiting is taking place?

  • Documentary evidence obtained by vouching credits on the latest bank statement to supporting documents.
  • Oral evidence obtained by discussion with controller personnel.
  • Documentary evidence obtained by vouching entries in the cash account to supporting documents.
  • Evidence obtained by preparing a schedule of interbank transfers. (correct)

    • Which of the following is a primary audit objective for cash?

  • That cash on hand as shown in the general ledger is represented by currency and coins on hand.
  • Ownership and proper accountabilities.
  • That cash balances are available without restrictions.
  • All of the above. (correct)

    • Which of the following is the most appropriate audit procedure to ensure the cash balance is accurately recorded on the company's financial statements?

  • Examine bank reconciliations, confirm bank balances, and verify cut off of receipts and disbursements; foot totals of reconciliations and compare to cash account balances. (correct)
  • Observe the cash count and trace the total to the general ledger.
  • Interview the company's controller to understand their cash management practices.
  • Perform analytical procedures to identify any unusual fluctuations in the cash balance.

    • Which of the following is NOT a primary audit objective for cash?

    <p>Completeness of recorded cash transactions.</p> Signup and view all the answers

    What is the best evidence an auditor could obtain to determine if check kiting is taking place?

    <p>Evidence obtained by preparing a schedule of interbank transfers.</p> Signup and view all the answers

    Which of the following is NOT a primary audit objective for cash?

    <p>Completeness of recorded cash transactions.</p> Signup and view all the answers

    Which of the following audit procedures is used to determine that cash is promptly deposited?

    <p>Compare the daily cash receipts totals with the bank deposits.</p> Signup and view all the answers

    What is the primary purpose of sending a standard confirmation request to financial institutions with which the client has done business during the year?

    <p>Corroborate information regarding deposit and loan balances.</p> Signup and view all the answers

    What is the major flaw in the audit procedure where the auditor instructed the client's personnel to prepare a standard bank confirmation request for a bank account that had been closed during the year?

    <p>The bank account had been closed during the year.</p> Signup and view all the answers

    Which set of information does an auditor usually confirm on one form?

    <p>Accounts receivable and accrued interest receivable.</p> Signup and view all the answers

    What is a purpose of the auditor ordinarily sending a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance?

    <p>Detect kiting activities that may otherwise not be discovered.</p> Signup and view all the answers

    Which of the following audit procedures is used to review the segregation of duties for cash receipts?

    <p>Compare cash receipt lists with the receipts journal and bank deposit slips.</p> Signup and view all the answers

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