Select the best answer for each of the following situations and give reasons for your choice.

a. You have been assigned to the year-end audit of a financial institution and are planning the timing of audit procedures relating to cash. You decide that it would be preferable for the auditors to:

(1) Count the cash in advance of the balance sheet date in order to disclose any kiting operations at year-end.

(2) Coordinate the count of cash with the cutoff of accounts payable.

(3) Coordinate the count of cash with the count of marketable securities and other negotiable assets.

(4) Count the cash immediately upon the return of the confirmation letters from the financial institution.

b. To gather evidence on the balance per bank in a bank reconciliation, the auditors would examine all of the following except:

(1) Cutoff bank statement.

(2) Year-end bank statement.

(3) Bank confirmation.

(4) General ledger.

c. The mailing of disbursement checks and remittance advices should be controlled by the employee who:

(1) Signed the checks.

(2) Approved the vouchers for payment.

(3) Matched the receiving reports, purchase orders, and vendors' invoices.

(4) Verified the mathematical accuracy of the vouchers and remittance advices.

d. Which of the following is a control that would prevent a paid voucher from being presented for payment a second time?
(1) Vouchers should be prepared by individuals who are responsible for signing checks.
(2) Vouchers should be approved by at least two responsible officials.
(3) The date on a voucher should be within a few days of the date the voucher is presented for payment.
(4) The official signing the check should compare the check with the voucher and should perforate or otherwise deface the voucher and supporting documents.

e. In order to guard against the misappropriation of company-owned marketable securities, which of the following is the best course of action that can be taken by a company with a large portfolio of marketable securities?
(1) Require that one trustworthy and bonded employee be responsible for access to the safekeeping area where securities are kept.
(2) Require that employees who enter and leave the safekeeping area sign and record in a log the exact reason for their access.
(3) Require that employees involved in the safekeeping function maintain a subsidiary control ledger for securities on a current basis.
(4) Require that the safekeeping function for securities be assigned to a bank or stockbroker that will act as a custodial agent.

f. Hall Company had large amounts of funds to invest on a temporary basis. The board of directors decided to purchase securities and derivatives and assigned the future purchase and sale decisions to a responsible financial executive. The best person(s) to make periodic reviews of the investment activity would be:
(1) An investment committee of the board of directors.
(2) The chief operating officer.
(3) The corporate controller.
(4) The treasurer.