kiem 2.2

The auditor needs to have an understanding of the client's internal controls over determining fair value estimates.

• T

• F

The starting point for testing the ending balance of financial instruments accounts is to obtain a gain or loss schedule for the year.

• T

• F

Business risks associated with financial instruments are the same for all companies.

• T

• F

The majority of financial instruments are valued at the lower of cost or market.

• T

• F

Only tests of details of cash balances are useful when auditors are specifically testing for fraud.

• T

• F

The auditor must extend the audit procedures in the audit of year-end cash when there are inadequate internal controls.

• T

• F

A proof of cash disbursements is not effective for discovering checks written for an improper amount, fraudulent checks, or misstatements in which the dollar amount appearing in the cash disbursements records is incorrect.

• T

• F

A proof of cash receipts is not useful for uncovering the theft of cash receipts or the recording and deposit of an improper amount of cash.

• T

• F

A proof of cash helps the auditor determine whether all recorded cash receipts were deposited in the bank and whether all recorded cash disbursements were paid by the bank.

• T

• F

Tests for kiting are performed using only a schedule of intrabank transfers.

• T

• F