Your client is in the process of acquiring another company.You have been requested to verify that cash for the company being acquired is properly stated.The audit technique that will yield the most persuasive evidence is
A) Examination of the company's escrow account.
B) Interview with the company's treasurer and cash manager.
C) Preparation and review of standard bank confirmation inquiries.
D) Analytical computations comparing current cash in the bank with previous accounting periods.

Question

Quizplus · Accepted Answer

The preparation and review of standard bank confirmation inquiries are the most persuasive evidence that cash for the company being acquired is properly stated. This audit technique involves requesting information directly from the banks where the company being acquired holds its cash balances. By obtaining confirmation directly from the bank, auditors can verify the accuracy of reported cash balances and ensure that the cash is not pledged as collateral for any loans or subject to any other encumbrances.

Your Client Is in the Process of Acquiring Another Company