Auditors should expect to find the authorizing signatures of the CEO, CFO, chair of the board of directors and perhaps other high-ranking officers on financing documents.
True
False
True
The inherent risk associated with the Finance and Investment cycle is less than that associated with any other cycle, especially given the low number of transactions typically involved
True
False
False
If the auditor suspects that the financial statements are misstated, he or she should perform procedures to confirm of dispel that suspicion.
True
False
True
If evidence of significant misstatements is obtained, an appropriate level of management needs to be informed.
True
False
False
Auditors must know the provisions of the securities laws to the extent that they can identify situations that constitute obvious fraud, but do not need to consult legal experts as they pursue investigations.
True
False
False
capital budget:
management document that contains the plans for asset purchases and business acquisitions.
cash flow forecast:
forecast that informs the board of directors and management of the business plans, the prospects for cash inflows and the needs for cash outflows.
compensating control:
a control feature used when a standard control procedure (such as strict segregation of functional responsibilities) is not specified by the company.
paper trail:
set of telltale signs of erroneous accounting, missing or altered documents or a "dangling debit" (the false or erroneous debit that results from an overstatement of assets).
registrar:
fiduciary who keeps the shareholder list and from time to time determines the shareholders eligible to receive dividends (shareholders of record on a dividend record date) and those entitled to vote at the annual meeting.
risk model:
AR = IR x CR x DR (chapter 12); AR = IR x CR x AP x RIA (chapter 20)
test of controls:
ordinary and extended procedures designed to produce evidence about the effectiveness of client controls that should be in operation.
transfer agent:
fiduciary who handles the exchange of shares, cancelling the shares surrendered by sellers and issuing new certificates to buyers.
