The auditor may obtain the year-end bank statement directly from the bank and prepare the reconciliation personally. This step is most likely when:
A) the auditor suspects possible material misstatements.
B) it is impracticable to obtain confirmations.
C) detection risk is set at high.
D) detection risk is set at moderate.
E) detection risk is set at low.

Question

Quizplus · Accepted Answer

When the auditor suspects possible material misstatements, obtaining the year-end bank statement directly from the bank and preparing the reconciliation personally can provide a higher level of assurance regarding the accuracy of the bank balances and transactions. This step is a more direct and reliable form of evidence gathering when there are concerns about the integrity of the financial information provided by the client.

The Auditor May Obtain the Year-End Bank Statement Directly from the Bank