The Bank of New Haven Relies Heavily on Computers to Calculate

question 73

Multiple Choice

The Bank of New Haven relies heavily on computers to calculate the settlements of amounts due to other banks.Given that the process is highly automated,the auditor would not be able to obtain sufficient evidence with substantive procedures.The auditors of the Bank of New Haven should

• A)design and perform tests of controls.
• B)qualify the opinion for the section on settlements.
• C)hire a specialist to give an opinion on the proper functioning of the system.
• D)perform a walkthrough of the system.

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Definitions:

Expected Return

The anticipated average return of an investment over a specified period, based on historical data or statistical analysis.

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures, indicating the liquidity available for expansion or dividend distribution.

Corporate Tax Rate

The percentage of a corporation's income that is seized by the government as tax.

Depreciation

The reduction in value of an asset over time, particularly in respect of wear and tear.