15. The Parmalat fraud case involved:

A fraudulent cash confirmation. Kiting of funds between banks in India and banks in Pakistan. A bank reconciliation performed by the client that systematically understated cash. Major unrecorded disbursements for equipment.

16. Which of the following is not confirmed on the standard confirmation form used for cash balances at financial institutions?

Cash checking account balances. Cash savings account balances. Loans payable. Securities held for the client by the financial institution.

17. Which of the following is not a control that generally is established over cash transactions?

Separating cash handling from recordkeeping. Centralizing the receipt of cash. Depositing each day's receipts intact. Obtaining a receipt for every disbursement.

18. An auditor may obtain information on the December 31 month-end balance per bank in which of the following?

Standard Confirmation Form January 1-10 Cutoff Statement A. Yes Yes B. Yes No C. No Yes D. No No

19. Which of the following procedures in the cash disbursements cycle should not be performed by the accounts payable department?

Comparing the vendor's invoice with the receiving report. Canceling supporting documentation after payment. Verifying the mathematical accuracy of the vendor's invoice. Preparing the check for signature by an authorized person.

20. To establish the existence and ownership of a large long-term investment in the common stock of a publicly traded company, the auditors ordinarily perform a security count or:

Rely on the clients internal controls if the auditors have reasonable assurance that the control procedures are being applied as prescribed. Confirm the number of shares owned that are held by an independent custodian. Determine the market price per share at the balance sheet date from published quotations. Confirm the number of shares owned with the issuing company.

21. What type of error is the CPA most likely to discover when he/she examines all shipping reports dated in January of 20X1, shipped FOB shipping point, which were recorded in December of 20X0 as credit sales?

Accounts receivable are understated at December 31, 20X0. Accounts receivable are overstated at December 31, 20X0. Operating expenses are overstated for the 12 months ended December 31, 20X0. Sales returns and allowance are overstated at December 31, 20X0.

22. The audit working papers often include a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. This aging is best used by the auditors to:

Consider internal control over credit sales. Test the accuracy of recorded charge sales. Estimate credit losses. Verify the validity of the recorded receivables.