Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?
Download Printable PDF. VALID exam to help you PASS. 100.When there are numerous property and equipmenttransactions during the year, an auditor who plans to assesscontrol risk at a low level usually performsa. Tests of controls and extensive tests of property andequipment balances at the end of the year. Get answer to your question and much more 101.In general, material fraud perpetrated by which of thefollowing are most difficult to detect? Get answer to your question and much more 102.Which of the following isnotan accurate statementabout communication of internal control related matters tomanagement on a nonissuer (nonpublic) company?a. The auditor must communicate both materialweaknesses and significant deficiencies.b. The auditor must communicate in writing. c. Previously communicated weaknesses that have notbeen corrected need not be recommunicated.d. A communication indicating that no significantdeficiencies were identified should not be issued. 103.Which of the following matters would an auditormostlikely consider to be a material weakness to becommunicated to those charged with governance of anaudit client? Get answer to your question and much more c. Ineffective oversight of financial reporting by thosecharged with governance.d. Management’s current plans to reduce its ownershipequity in the entity. 104.Which of the following statements is correct concerningsignificant deficiencies in an audit?a. An auditor is required to search for significantdeficiencies during an audit.b. All significant deficiencies are also considered to bematerial weaknesses.c. An auditor may communicate significant deficienciesduring an audit or after the audit’s completion.d. An auditor may report thatnosignificant deficiencieswere noted during an audit. This preview shows page 221 - 224 out of 495 pages. 178. Which of the following controls would an entity most likelyuse in safeguarding against the loss of trading securities?A. The independent auditor traces all purchases and salesof trading securities through the subsidiary ledgersto general ledger.B. An independent trust company that has no directcontact with the employees who have record-keepingresponsibilities has possession of the securities.C. The internal auditor inspects the trading securities in the entity’s safe each year on the balance sheetdate.D. A designated member of each board of directorscontrols the securities in a bank safe-deposit box.Engaging an independent trust company for the custody ofan entity’s trading securities may be considered the bestway to safeguard such securities against loss. Such aninstitution normally has very strict controls over assetsunder it’s custody, including access to its vaults.AnswerAis incorrect because an independent auditor’stracing of trading securities transactions is an audittest, not a control.AnswerCis incorrect because the internal auditor’sinspection of trading securities in the entity’s safe eachyear on the balance sheet date does not assure that nosecurities have been removed between inspections dates.AnswerDis incorrect because a better control is to requirethe presence of two authorized persons to access a safedeposit box.179. Which of the following controls would a company most likelyuse to safeguard marketable securities when such securitiesare not in the custody of an independent trust agent?A. The chairman of the board of directors verifies themarketable securities, which are kept in a bank safe-deposit box, each year on the balance sheet date.B. The internal auditor and the controller independentlytrace all purchases and sales of marketable securitiesfrom the subsidiary ledgers to the general ledger.C. Two company officials have joint control of marketablesecurities, which are kept in a bank safe-deposit box.D. The investment committee of the board of directorsperiodically reviews the instrument decisionsdelegated to the treasurer.A physical control to safeguard an entity’s assets suchas marketable securities is to keep them in a bank safe-deposit box requiring two signatures to gain access.AnswerAis incorrect because verification of marketablesecurities once a year is unlikely to provide adequatecontrol.AnswerBis incorrect because tracing of marketablesecurities transactions to the accounting recordsassures proper recording but does not physicallysafeguard the asset. AnswerDis incorrect because periodic review of theinvestment decisions delegated to the treasurer does notphysically safeguard the asset. Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 495 pages? Upload your study docs or become a Course Hero member to access this document Tags Accountant, Financial audit, Certified Public Accountant, assurance engagements Which of the following controls would a company most likely use to safeguard investment?Answer and Explanation: The correct option is (b). If an independent trust agent is not employed then the company would most likely use two company officials who have joint control of marketable securities, which are kept in a bank safe-deposit box in order to safeguard marketable securities.
Which of the following controls would an entity most likely use to assist in satisfying the completeness assertion related to long term investments?Which of the following control activities would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments? The internal auditor compares the securities in the bank safe-deposit box with recorded investments.
Which of the following internal controls would be most likely to reduce the risk of diversion of customer receipts by an entity's employees?Which of the following internal controls most likely would reduce the risk of diversion of customer receipts by an entity's employees? Explanation: A lockbox system is the best means of preventing fraud of cash by employees because they will never have direct access to cash receipts.
Which of the following audit procedures is the most appropriate when internal control over cash?Which of the following audit procedures is the most appropriate when internal control over cash is weak or when a client requests an investigation of cash transactions? -Bank reconciliation.
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Which of the following controls would an entity most likely use in safeguarding against the loss of investment securities?
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