Chapter 16 - Chapter 16 - Auditing the Financing/Investing...

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Chapter 16 - Auditing the Financing/Investing Process: Cash and Investments 16-1 CHAPTER 16 AUDITING THE FINANCING/INVESTING PROCESS: CASH AND INVESTMENTS Answers to Multiple-Choice Questions 16-12 b 16-18 d 16-13 a 16-19 b 16-14 d 16-20 b 16-15 a 16-21 b 16-16 b 16-22 c 16-17 b 16-23 b Solutions to Problems 16-24 The auditor's internal control questionnaire should include the following additional questions: Does access to the bank safe deposit vault require the signature or presence of two designated persons? Are all individuals who have access to marketable securities bonded? Are those who have access to the securities denied access to the accounting records? Does the accounting department keep detailed records of Purchases and sales? Securities (including number of shares) owned? Stock certificate numbers? Dividend income? Gains and losses? Are all securities registered in the name of the company? Are all securities periodically inspected? Is the inspection performed on a surprise basis? Is the physical inventory of securities reconciled with the accounting records? Are all purchases and sales of securities executed by the treasurer within the directives of the investment committee? Is the amount of dividends received on individual investments periodically reconciled to published public records? Does the investment committee periodically review compliance with its established policy? 16-25 The audit program for auditing Sevcik's bank balance should include the following steps: Review answers to questions on confirmation requests to determine proper recognition in accounting records and the necessity for financial statement disclosure. Make inquiries as to compensating balances and restrictions. Obtain copies of the bank reconciliations as of the balance sheet date and
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Chapter 16 - Auditing the Financing/Investing Process: Cash and Investments 16-2 Trace the adjusted book balances to the general ledger balances. Compare the bank balances to the opening balances on the cutoff bank statements.
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Chapter 16 - Chapter 16 - Auditing the Financing/Investing...

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