ExpertMedium1 markMultiple Choice
CPA · Question 51 · Area III: Performing Procedures
An auditor is auditing the cash account. Which of the following procedures is MOST effective for detecting 'kiting'?
An auditor is auditing the cash account. Which of the following procedures is MOST effective for detecting 'kiting'?
Answer options:
A.
Requesting a cutoff bank statement.
B.
Preparing a bank transfer schedule.
C.
Confirming bank balances.
D.
Counting petty cash.
How to approach this question
Kiting = Interbank Transfers. Test = Bank Transfer Schedule.
Full Answer
B.Preparing a bank transfer schedule.✓ Correct
Preparing a bank transfer schedule.
A bank transfer schedule analyzes transfers between bank accounts near year-end to ensure they are recorded in the same period for both the disbursing and receiving accounts.
Common mistakes
Thinking bank confirmations detect kiting.
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