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Question 252 - IIA-CIA-Part2 discussion

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As part of internal audit's assistance with an annual external audit, the internal auditors are required to do a preliminary analytical review of an bank account balances. This involves verifying the current year end balances as web as comparing the current year end balances with previous year end balances to highlight significant changes. Which of the following is the most reliable source for verification of the current year end bank balances?

A.
Bank confirmations
Answers
A.
Bank confirmations
B.
Internal bonk statements
Answers
B.
Internal bonk statements
C.
Bank reconciliations as of the end of the year
Answers
C.
Bank reconciliations as of the end of the year
D.
Bank account general ledger balancer as of the end of the year
Answers
D.
Bank account general ledger balancer as of the end of the year
Suggested answer: A

Explanation:

Bank confirmations are the most reliable source for verifying the current year-end bank balances. These confirmations are direct responses from the bank to the auditor, providing independent verification of the account balances as of the end of the year. This external confirmation is considered more reliable than internal documents like bank statements, reconciliations, or general ledger balances because it comes directly from a third-party source, ensuring its accuracy and completeness.

Reference:

The Institute of Internal Auditors (IIA) - Practice Guide: External Confirmations

Auditing Standards (e.g., ISA 505 - External Confirmations)

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asked 18/09/2024
Jonaid Alam
36 questions
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