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Question 46 an internal auditor at a savings and loan

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Question: 46An internal auditor at a savings and loan association concludes that a secured real estateloan is collectible. Which of the following engagement procedures provides the most persuasiveinformation about the loan’s collectibility?A.Confirming the loan balance with the borrower.B.Reviewing the loan file for proper authorization by the credit committee.
C.Examining documentation of a recent, independent appraisal of the real estate.D.Examining the loan application for appropriate borrowers’ signatures.Answer (C) is correct.Real estate appraisals are based on estimated resale value or future cash flows. A recent, independentappraisal provides information about the borrower’s ability to repay the loan. Such an appraisal tends tobe reasonably reliable because it is timely and derives from an expert source independent of theengagement client.AA confirmation provides information about a loan’s existence, not its collectibility.BInformation about the loan’s authorization is not relevant to its collectibility.DThe validity of the loan is not relevant to the borrower’s ability to repay the loan.Question: 47The most persuasive information regarding the asset value of newly acquired computersis
AAn unsubstantiated response to an inquiry of management ordinarily yields the least persuasiveinformation.BObservation of procedures for acquisition would not be as persuasive as documents showing the costof the asset.CPhysical examination of the asset reveals only limited information as to the asset’s value.

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