The Auditor Should Ordinarily Mail Confirmation Requests to All Banks

question 65

Multiple Choice

The auditor should ordinarily mail confirmation requests to all banks with which the entity has conducted any business during the year, regardless of the year-end balance, since

• A) The confirmation form also seeks information about indebtedness to the bank.
• B) This procedure will detect kiting activities that would otherwise not be detected.
• C) The mailing of confirmation forms to all such banks is required by generally accepted auditing standards.
• D) This procedure relieves the auditor of any responsibility with respect to nondetection of forged checks.

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Definitions:

Demand Curve

A graphical representation that shows the relationship between the quantity of a good that consumers are willing to purchase and its price.

Consumers

Individuals or groups who purchase goods and services for personal use and not for manufacturing or resale purposes.

Microeconomic Theory

The study of individual, household, and firm behaviors in decision making and allocation of resources.

Emphasis

A special importance, value, or prominence given to something.