12. The usefulness of the standard bank confimation request may be limited because the yee who completes the form may bank A not believe that the bank is obligated to verify confidential information to a 8. sign and return the form without respecting the accuracy of the client's bank be unaware of all of the financial relationships that the bank has with the client not have access to the client's cutoff bank statement 13. In auditing long-term bonds payable, an auditor would most ikely A. Confirm the existence of individual bond-holders at year end. examine documentation of assets purchased with bond proceeds for liens mpare interest expense with the bond payable amount for reasonableness Perform analytical procedure on the bond premium and discount 14. Which of the following is a control procedure that most likely could help prevent employee payroll fraud? A Salary rates resulting from new hires are approved by the payroll supervisor The human resources department promptly sends employee termination notices to the payroll pervisor C. Employees who distribute payroll checks forward unclaimed payroll checks to the absent employee supervisors D. Total hours used for determination of gross pay are calculated by the payroll supervisor 15. In auditing payroll, an auditor mostly likely would: A. observe entity employees during a payroll distribution B. trace individual employee deductions to entity journal entries C. verify that check representing unclaimed wages are mailed D. compare payroll costs with entity standards or budgets 16. Which of the following best describes the element of inherent risk that underlines the application of GAAS, specially the standards of field work and reporting? A. Cash audit work may have to be carried out in a more conclusive manner than inventory audit work B. Intercompany transactions are usually subject to less detailed scrutiny than arm's-length transactions with outside parties C. Inventories may require more attention by the auditor on an engagement for a merchandising enterprise than on an engagement for a public utility. D. The scope of the audit need not be expanded i misstatements that arouse suspicion of fraud are relatively insignificant amounts. 17. Which of the following statements is not correct about materiality? A. The financial statements in conformity with GAAP, whereas other matters are not important B. The auditor considers materiality for planning purposes in terms of the largest aggregate level of misstatements that could be material to any one of the financial statements. C. Materiality judgments are made in light of surrounding circumstances and necessarly nvolve both quantitative and qualitative judgments concept of materiality recognizes that some matters are important for fair presentation of D. An auditor's consideration of materiality is influenced by the auditor's perception of the needs of a reasonable person who will rely on the financial statements