Which of the following controls would an entity most likely use in safeguarding against?

Let’s Check

1. Which of the following is not a control that is designed to protect investment securities?

a. Custody over securities should be limited to individuals who have recordkeeping responsibility

over the securities.

b. Securities should be properly controlled physically in order to prevent unauthorized usage.

c. Access to securities should be vested in more than one individual.

d. Securities should be registered in the name of the owner.

2. Which of the following controls would a company most likely use to safeguard marketable securities

when an independent trust agent is not employed?

a. The investment committee of the board of directors periodically reviews the investment decisions

delegated to the treasurer.

b. Two company officials have joint control of marketable securities, which are kept in a bank safe-

deposit box.

c. The internal auditor and the controller independently trace all purchases and sales of marketable

securities from the subsidiary ledgers to the general ledger.

d. The chairman of the board verifies the marketable securities, which are kept in a bank safe-

deposit box, each year on the balance sheet date.

3. Which of the following controls would an entity most likely use to assist in satisfying the completeness

assertion related to long-term investments?

a. Senior management verifies that securities in the bank safe-deposit box are registered in the

entity’s name.

b. The internal auditor compares the securities in the bank safe-deposit box with recorded

investments.

c. The treasurer vouches the acquisition of securities by comparing brokers’ advices with canceled

checks.

d. The controller compares the current market prices of recorded investments with the brokers’

advices on file.

4. Which of the following controls would an entity most likely use in safeguarding against the loss of

marketable securities?

a. An independent trust company that has no direct contact with the employees who have

recordkeeping responsibilities has possession of the securities.

b. The internal auditor verifies the marketable securities in the entity’s safe each year on the balance

sheet date.

c. The independent auditor traces all purchases and sales of marketable securities through the

subsidiary ledgers to the general ledger.

d. A designated member of the board of directors controls the securities in a bank safe-deposit box.

Which of the following controls would an entity most likely use in safeguarding against the loss?

Which of the following controls would a company most likely use to safeguard investment securities when an independent trust agent is not employed?

Which of the following controls would an entity most likely use to assist Insatisfyingthecompleteness Assertionrelated to long term investments?

Which of the following internal controls would be most likely to reduce the risk of diversion of customer receipts by an entity's employees?