ExpertCPA · Question 24 · Area III: Performing Procedures
An auditor sends positive confirmation requests to a sample of customers. A customer responds stating, 'We do not owe $15,000; we paid this amount on December 28.' The auditor's client has a year-end of December 31. The auditor investigates and finds the check was received and deposited by the client on January 3. Which of the following is the MOST likely conclusion?
An auditor sends positive confirmation requests to a sample of customers. A customer responds stating, 'We do not owe $15,000; we paid this amount on December 28.' The auditor's client has a year-end of December 31. The auditor investigates and finds the check was received and deposited by the client on January 3. Which of the following is the MOST likely conclusion?
Answer options:
The account is misstated because the cash was not in the bank at year-end.
The exception is a timing difference and not a misstatement.
This indicates a cutoff error; the client should have recorded the cash in December.
This is a misappropriation of assets scheme (lapping).
How to approach this question
Full Answer
Common mistakes
Practice the full CPA AUD Practice Exam 4
78 questions · hints · full answers · grading