When Assessing Risks Affecting Cash

question 135

Multiple Choice

When assessing risks affecting cash,

• A) if a business defers preparing bank reconciliations for long periods, the value of the control is reduced and may affect the auditor's assessment of control risk for cash.
• B) most companies are likely to have significant client business risks affecting their cash balances.
• C) there is a low inherent risk for the existence and completeness objectives for cash.
• D) all of the above are accurate statements.

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Definitions:

Net Period

The time period within which a net payment is due after any discounts are applied.

Compensating Balance

A minimum balance that must be maintained in a bank account, usually as a condition for obtaining a loan or line of credit.

Routine Transactions

Transactions that occur regularly in the course of business operations, often related to daily financial activities.

Prime Rate

The interest rate at which banks lend to their most credit-worthy customers, often used as a benchmark in the lending industry.