Investigation of New Clients and Re-Evaluation of Existing Ones Is

question 38

Multiple Choice

Investigation of new clients and re-evaluation of existing ones is an essential part of deciding:

• A) acceptable audit risk.
• B) financial risk.
• C) statistical risk.
• D) inherent risk.

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Definitions:

Loan Origination Fees

Charges paid to a lender or broker for processing a new loan application, used as compensation for putting the loan in place.

Periodic Interest Revenue

The interest income earned on investments during a specific period, reflecting the return on interest-bearing financial assets.

Note Proceeds

The amount of money received by a borrower from the lender when a note is issued; essentially the principal amount of the loan.

Debt Restructuring

A financial process where the terms of existing debts, such as the interest rate or payment schedule, are altered to provide relief to the borrower.