Each Numbered Item Below Indicates One Action an Auditor Might

question 71

Short Answer

Each numbered item below indicates one action an auditor might take as part of a financial statement audit.Which of the two lettered alternatives would be the immediate next step based on the five generic financial statement audit steps presented in the text?
1) Ask employees about the ethical tone management sets in the organization.
a.Prepare a risk/control matrix.
b.Examine the CEO's resume.2) Discuss the educational background of each member of the upper management team.
a.Outline the client's risk exposures.
b.Verify balances in accounts receivable.3) Determine if adequate separation of duties exists.
a.Prepare a systems flowchart of the sales/collection process.
b.Compute depreciation on plant assets.4) Choose transactions to verify as part of the audit.
a.Question management about their knowledge of COSO models.
b.Issue an audit report.5) Examine a systems flowchart to determine who reconciles the bank statement.
a.Verify that business processes are adequately documented.
b.Reconcile the latest bank statement.

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Definitions:

Maple Bond

A Maple Bond is a debt security, denominated in Canadian dollars, issued by foreign companies or governments that are sold in Canada.

Canadian Bond Market

The marketplace where Canadian government and corporate bonds are issued and traded, reflecting Canada's economic condition and interest rates.

Canadian Market

The financial and economic market within Canada, encompassing various sectors, including the Toronto Stock Exchange (TSX).

U.S. Bond Market

The financial market in which U.S. government and corporate bonds are traded, essential for investors looking for debt securities.