As being an auditor to the following situations how do you complete the following:

Insurance

You were assigned to audit the financial statements ofDong Motor Insurance Company(the Company),a non-life insurance companyofferingcomprehensive motor vehicle insurance.The Company follows a fiscal year beginning July 1 and ending June 30.The following are the data on premiums writtenand premiums ceded toreinsurers for thefiscalyearending June 30,2021are as follows.

Month

Premiums Written

Premiums Ceded

July 2020

P846,000

P211,500

August 2020

514,500

128,625

September 2020

736,500

184,125

October 2020

1,215,000

303,750

November 2020

965,000

241,250

December 2020

1,316,000

329,000

January 2021

1,294,000

323,500

February 2021

873,000

218,250

March 2021

835,000

208,750

April 2021

848,500

212,125

May 2021

1,267,000

316,750

June 2021

967,500

241,875

The Company uses 24thmethod in recognizing revenues. However, the Company's ERP recognizesrevenue upon receipt of the premium.

How much should be thenet premium income to be presented in the statement of income?

Group of answer choices

P2,919,500

P4,170,031

P5,560,042

P4,588,469

[Case 2]The adjustment to unearned premium reserves -cededshould include:

Group of answer choices

A credit of P1,390,010

A debit of P2,919,500

A debit of P8,758,500

A credit of P1,529,490

[Case 2]Premiums ceded to reinsurers are presented as ___ in the statement of income.

Group of answer choices

Cost of contract benefits

Operating expenses

Reduction from gross premiums

Addition to premium income

[Case 2]How much is theminimumunimpairednet worth required from insurance companies as of June 30, 2021?

Group of answer choices

P900 million

P250 million

P550 million

P1.3 billion

[Case 2]Which of the followingis notconsidered to be admitted asset of an insurance company?

Group of answer choices

Loans receivable

Cash in bank

Prepayments

Investment in listed stocks

[Case 2] Whataudit procedureshould the auditor employ in assessing an insurance company's compliance with Minimum Net Worth and Risk Based Capital (RBC) requirements?

Group of answer choices

Observation

Reperformance

Inquiry

Recalculation

[Case 2]If an insurance company's RBC consistently falls below 50%, which audit procedureshould the auditor devote more time to?

Group of answer choices

Assessment of going concern

Revenue recognition

Revaluation of property and equipment to increase the value of admitted assets

Provision for litigations as cases are likely to be filed by the regulators and the policyholders against the insurance company

Case 3. Banks

On January 1, 2021, Bank of the Oro granted a ten-year term loan of P10,000,000 on Runny Company. If there were no possibility of credit losses, the coupon rate that Bank of the Oro would charge the borrower is 10% per annum; but because of the borrower's credit rating, Bank of the Oro estimates that there is a possibility the borrower might default on the payments and the expected credit losses are estimated at P100,000 per year over the ten-year term. Accordingly, Bank of the Oro charges the borrower 11% coupon rate to reflect the yield on the instrument to include a return to cover those credit losses expected when the loan is first recognized.

Assuming there is no significant deterioration of credit risk for the year ended December 31, 2021. How much is the 12-month ECL as of December 31, 2021?

Group of answer choices

P557,726

P90,090

P180,180

P647,816

[Case #3]Assuming there is significant deterioration of credit risk for the year ended December 31, 2021. How much is the lifetime ECL as of December 31, 2021?

Group of answer choices

P90,090

P553,704

P588,923

P180,180

[Case #3]The following are components of expected credit loss, except:

Group of answer choices

Probability of default

Future value of default

Exposure at default

Loss given default

Flag question: Question 26

Question 26

1pts

[Case #3]BSP issuances include the following, except:

Group of answer choices

Circulars

Circular Letters

Manual of Restrictions for Banks (MORB)

Memoranda

[Case #3]Banks have the following characteristics which generally distinguish them from most other commercial enterprises, except:

Group of answer choices

They normally operate through a wide network of branches and departments which are geographically dispersed. This necessarily involves a greater decentralization of authority and dispersal of financial reporting and internal control functions, with consequent difficulties in maintaining uniform operating practices and information systems, particularly when the branch network transcends national boundaries.

They are regulated by governmental authorities, but the resultant regulatory requirements often do not influence generally accepted accounting principles and auditing practices within the industry.

They engage in a large volume and variety of transactions both in terms of number and value. This necessarily requires complex internal control and in particular, the entity's information system and related business processes relevant to financial reporting, and widespread use of electronic data processing.

They have custody of large volumes of monetary items, including cash and negotiable instruments, whose physical security has to be assured. This applies both to the storage and the transfer of monetary items and makes banks vulnerable to misappropriation and fraud. They therefore need to establish formal operating procedures, well defined limits for individual discretion and rigorous systems of internal control.

[Case #3]Special audit considerations arise in the audits of banks because of the following, except:

Group of answer choices

The effect of the regulations in the various jurisdictions in which they operate.

The particular nature of the business risks associated with the transactions undertaken by banks.

The extensive dependence on manual systems to process transactions.

The continuing development of new products and banking practices which may not be matched by the concurrent development of accounting principles and auditing practices.

[Case #3]In considering the objective and scope of the audit and the extent of his responsibilities, the auditor needs to assess hisown skills and competence and that of his staffto conduct the engagement. In making such an assessment, the auditor should best consider the following factors, except:

Group of answer choices

The availability of sufficient expertise in the aspects of banking relevant to the audit of the business activities of the bank.

The integrity of the client-bank's management.

The adequacy of expertise in the context of the computer information systems (CIS) and electronic funds transfer (EFT) systems used by the bank.

The adequacy of resources and/or inter-firm arrangements to carry out the work necessary at the number of domestic and international locations of the bank at which audit procedures are likely to be required.

[Case #3]

Statement I: Obtaining an understanding of the bank entity and its environment will require the auditor to understand: the economic and regulatory environment prevailing for each of the countries in which the bank operates; and the market conditions existing in each of the sectors in which the bank operates.

Statement II: The auditor will need to acquire and maintain a good working knowledge of the products and services offered by the bank. In acquiring and maintaining that knowledge, the auditor needs to be aware of the many variations in the basic deposit, loan and treasury services that are offered and continue to be developed by banks in response to market conditions. To do so, the auditor needs to understand the nature of services rendered through instruments such as letters of credit, acceptances, interest rate future, forward and swap contracts, and other similar instruments in order to understand the inherent risks and accounting implications thereof.

Statement III: Often a bank's loan portfolio has large concentrations of credits to highly specialized industries such as real estate, shipping, and natural resources. Evaluating the nature of thesedoes notrequire an understanding of the business and reporting practices of those industries.

Group of answer choices

Only Statements I and II are incorrect.

Statements I, II, and III are correct.

Only Statement I is correct.

Only Statement III is incorrect.

[Case #3]

A bank will invariably have individual assets (e.g., loans and, possibly, investments) which are of such a size that the auditor will wish to examine their documentation individually. However, in respect of most items, the use of analytical procedures techniques will prove to be a particularly important and useful procedure for the following reasons:

Statement I: Normally the two most important elements in the determination of a bank's earnings are interest income and interest expense. These have direct relationships to interest bearing assets and interest-bearing liabilities, respectively. To establish the reasonableness of these relationships, the auditor can examine the degree to which the reported income and expense vary from the amounts calculated on the basis of average balances outstanding and the bank's stated rates during the year. This examination would usually be made in respect of the categories of assets and liabilities used by the bank in the management of its business

Statement II: The accurate processing of the high volume of transactionsentered intoby a bank and the need for the auditor to rely on the continued and appropriate operation of the bank's internal controls can benefit from the review of ratios and trends and of the extent to which they vary from previous periods, budgets, and the results of other similar entities.

Statement III: The analytical review of account composition is an important method by which the auditor can detect certain conditions of audit concern, such as undue concentration of risk ofparticular industriesor geographic areas and potential exposure to interest rate, currency and maturity mismatches.

Statement IV: In most countries there is widespread availability of statistical and financial information available from regulatory and other sources which the auditor can use to conduct an in-depth analytical review of trends and peer group analyses.

Group of answer choices

Statements I, II, III, and IV are correct.

Only Statements I, III, and IV are correct.

Only Statement I is correct.

Only Statements II, III, and IV are correct.

[Case #3]

Statement I: As defined by ISA530"Audit Evidence," inspection consists of examining records, documents, or tangible assets. The auditor inspects in order to: satisfy himself as to the physical existence of negotiable assets available with the bank; and ensure he has the necessary understanding of the terms and conditions of agreements which are significant individually or in the aggregate in order to: assess their enforceability; and be satisfied as to the appropriateness of the accounting treatment they have been given.

Statement II: Examples of areas where inspection is used as an audit techniqueare:bullion; securities; loan agreements; and commitment agreements, such as: asset sales and repurchases; and guarantees.

Statement III: In carrying out inspection procedures, the auditor should be particularly vigilant regarding the existence of assets held in a fiduciary capacity. He needs to obtain reasonable assurance that adequate internal controls exist so that such assets arenotsegregated from those which are the property of the bank.

Group of answer choices

Only Statements II and III are correct.

Only Statements I and II are correct.

Statements I, II, and III are correct.

Only Statement II is correct.

Please include solutions in solving problems.