Which of the following sets of information does an auditor usually confirm on one form?

Question

BlackTom AI · Accepted Answer

When evaluating what an auditor typically confirms on one form, we consider standard audit procedures and the kinds of information commonly aggregated for verification.
Option 1: 'Cash in bank and collateral for loans.' This aligns with common procedures because banks hold cash balances and collateral details are often tied to loan agreements that auditors verify using a single summary form or bank confirmation. Consolidating cash and collateral into one form helps corroborate liquidity and secured obligations efficiently.
Option 2: 'Accounts payable and purchase commitments.' While accounts payable is a routine item in audits, purchase commitments are more about future procurement obligations and may be disclosed separately or in notes rather than routinely confirmed on the same bank-focused form. This makes the pairing less typical for a single conﬁrmation form.
Option 3: 'Accounts receivable and accrued interest receivable.' These are receivable balances, which are important, but auditors usually obtain confirmations from external parties (like customers) or rely on internal records; combining these with a broader, bank-focused form is less common, as it mixes receivables with interest accrual details that may require different confirmation methods.
Option 4: 'Inventory on consignment and contingent liabilities.' Inventory on consignment is a specific inventory arrangement, and contingent liabilities require disclosure or different confirmation methods. Grouping these disparate items on one form is atypical because it blends inventory status with potential liabilities that may need separate confirmations and disclosures.
In light of these considerations, the option that most closely reflects a typical one-form confirmation concept—consolidating cash and collateral information for verification purposes—is Option 1. The other options involve items that are either not usually confirmed together on a single form or require separate confirmation processes and documentation.

ACG442_A_2025SPRING Auditing Ch06 Practice Quiz

Which of the following sets of information does an auditor usually confirm on one form?

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