Description
- Identify 4 of the 6 tests an auditor uses on the bank reconciliation? (1 Mark).
2- What is the difference between a contingent liability and a commitment? (1 Mark).
3- For each of the following situations, indicate what type of audit report is most appropriate:
a. The auditor lacks independence in fact, but not necessarily in appearance.
b. There is a scope limitation and it is material but the overall financial statements are still presented fairly.
c. The uncorrected misstatements are immaterial.
d. There is a departure from GAAP and it is pervasively material. (2 Marks).
4- Distinguish between the following theories of ethical behavior:
a rights-based approach, and a justice-based approach.Unformatted Attachment Preview
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Explanation & Answer
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Running head: ACCOUNTING 401
1
Accounting 401
Institution Affiliation
Date
2
ACCOUNTING 401
Introduction
Specific procedures such as auditing is conducted to ensure that actual values reflect in
the financial statements and ensure that there is accurate data in the company's financial
statements. A bank reconciliation is a statement through which a company ascertains the
differences in the cash balance in the cash book and the account in the bank. The process of bank
reconciliation helps a company in the identification of errors that may accrue in the books of
account. It also serves as a measure of fraud detection in the company as all the accounting
transactions are accounted for. Some errors in leading to bank reconciliation are as a result of
either the bank or the company. Unpresented cheques to the bank would cause the indifference
between the bank statements and the company's cashbook. Therefore, there is a need to prepare a
bank reconciliation to ensure that the figures in the bank statement are at par with those in the
cashbook.
Tests that an auditor uses on the bank reconciliation
The bank reconciliations may be faced with some issues hence the need to audit them.
Auditing will involve the financial inspection of the prepared bank reconciliation statement. The
audit process ...