When assessing risks affecting cash,
A) if a business defers preparing bank reconciliations for long periods, the value of the control is reduced and may affect the auditor's assessment of control risk for cash.
B) most companies are likely to have significant client business risks affecting their cash balances.
C) there is a low inherent risk for the existence and completeness objectives for cash.
D) all of the above are accurate statements.

Question

Quizplus · Accepted Answer

Deferring bank reconciliations for long periods can increase the risk of errors, omissions, or fraud in cash balances, which reduces the effectiveness of the control. Therefore, it may affect the auditor's assessment of control risk for cash.

Answer: C
 Cash is a tangible asset, easy to count and verify its existence and completeness, therefore, the inherent risk for these objectives is generally low.

Therefore, the correct answer is A, C.

When Assessing Risks Affecting Cash