An Auditor Ordinarily Should Send a Standard Confirmation Request to All

question 11

Multiple Choice

An auditor ordinarily should send a standard confirmation request to all banks with which the client has done business during the year under audit,regardless of the year-end balance,because this procedure

• A) Provides for confirmation regarding compensating balance arrangements.
• B) Detects kiting activities that may not otherwise be discovered.
• C) Seeks information about indebtedness to the bank.
• D) Verifies securities held by the bank in safekeeping.

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Definitions:

Ratio Analysis

A quantitative analysis of information contained in a company’s financial statements, used to evaluate performance, liquidity, profitability, and solvency.

Profitability Ratios

Ratios that measure the amount of operating income or net income an organization is able to generate relative to its assets, owners’ equity, and sales.