CAF-8 · Chapter 9 · Question 10 of 10
Which of the following provides the most 'External' and 'Reliable' evidence for the cash balance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A direct bank confirmation letter received by the auditor from the client's bank.
Explanation
Direct external confirmations from third parties (banks) are highly reliable because they are objective and independent of the client's internal systems.
More Substantive Procedures: Current Assets MCQs
- Q2To test the 'Cut-off' assertion for inventory at year-end, the auditor should:
- Q3When sending external confirmations to trade receivables (debtors), what is the primary purpose of a 'Positive Confirmation'?
- Q4If a debtor fails to respond to three positive confirmation requests, which alternative procedure should the auditor perform to verify the…
- Q5Which of the following procedures would help an auditor identify understated (complete) trade payables at year-end?
- Q6What is the primary document used to perform a bank reconciliation?