As part of its loan agreement,Big Bank requires that only accounts receivable less than 60 days old be used as collateral.An auditor has been engaged to provide assurance that the accounts receivable on the list provided to the bank are indeed less than 60 days old.What type of engagement is the auditor conducting?
A)financial statement
B)compliance
C)operational
D)review

Question

Quizplus · Accepted Answer

The auditor is conducting a compliance engagement, specifically a compliance audit of the loan agreement between the borrower and the Big Bank. The purpose of the audit is to provide assurance that the borrower is complying with the requirement to use only accounts receivable less than 60 days old as collateral. The other choices (financial statement, operational, review) do not match the nature of the engagement as described in the scenario.

As Part of Its Loan Agreement,Big Bank Requires That Only