In Connection with the Examination of Financial Statements by an Independent

question 27

Multiple Choice

In connection with the examination of financial statements by an independent auditor,management suggests that members of the internal audit staff be utilized to minimize audit costs.Which of the following tasks could most appropriately be delegated to the internal audit staff?

• A) Selection of accounts receivable for confirmation, based upon the internal auditor's judgment as to how many accounts and which accounts will provide sufficient coverage.
• B) Preparation of schedules for negative accounts receivable responses.
• C) Evaluation of the internal control for accounts receivable and sales.
• D) Determination of the adequacy of the allowance for doubtful accounts.

---

Definitions:

Type Of Lien

Legal claim or hold on property as security for payment of a debt or fulfillment of some obligation.

Property

Assets or possessions that can be owned or controlled to produce value, including real (land and buildings) and personal (movable items) property.

Creditors

Entities or individuals to whom money or its equivalent is owed.

Third Party

A third party is an entity that is neither the principal nor the counterparty in a transaction, agreement, or legal case but may have an interest or be indirectly involved.