Customer Accounts: Ensure That the Firm Is Exercising Due Diligence

question 178

Multiple Choice

Customer accounts: Ensure that the firm is exercising due diligence in the opening and supervision of customer accounts. The procedures should be formalized in writing and in accordance with the rules and regulations of the appropriate regulatory authority. Ensure that daily customer positions and option exercises are in accordance with the limits established by the appropriate exchange. Verify that commissions generated by customer trades are properly calculated and posted to the general ledger.

• A) This is one of the primary audit objectives of stock and options
• B) This is one of the primary audit objectives of swaps
• C) This is one of the primary audit objectives of bonds
• D) None of these

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Definitions:

Collude

To engage in a secret agreement or cooperation, especially with the intention of cheating or deceiving others.

Cartel

An association of independent businesses or countries that work together to control production, pricing, and marketing of goods to monopolize a market.

Monopoly

A firm that is the sole seller of a product without any close substitutes.

Game Theory

The study of how people behave in strategic situations