Your Client Is in the Process of Acquiring Another Company

question 20

Multiple Choice

Your client is in the process of acquiring another company. You have been requested to verify that cash for the company being acquired is properly stated. The audit technique that will yield the most persuasive evidence is:

• A)examination of the company's escrow account.
• B)interview with the company's treasurer and cash manager.
• C)preparation and review of standard bank confirmation inquiries.
• D)analytical computations comparing current cash in the bank with previous accounting periods.

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Definitions:

Operational risk

The risk of loss resulting from inadequate or failed internal processes, people, systems, or external events affecting an organization's operations.

Reputation risk management

The process of identifying, assessing, and mitigating threats that could adversely affect an organization's reputation.

Managerial problem solving

The method by which managers identify, analyze, and resolve issues affecting their organization's operations and objectives.

Certainty

The state of being completely confident or having no doubt about something.