When Positive Confirmations Have Been Used, It Is Normally Desirable

question 33

Multiple Choice

When positive confirmations have been used, it is normally desirable to account for unconfirmed balances with alternative procedures:

• A) even if the amounts are small.
• B) only if the amounts are large.
• C) only if the amounts are material.
• D) if it does not increase the audit firm's costs.

---

Definitions:

Federal Reserve's Assets

These are financial assets held by the Federal Reserve Bank, including government securities, mortgage-backed securities, and loans to banks.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Required Reserve Ratio

The fraction of deposits that a bank is required by regulation to hold in reserve, not loaning them out, ensuring banks can meet their depositor's demands.

Required Reserve

The minimum amount of funds that a bank must hold in reserve against deposits made by customers, as mandated by central banking authorities.