Final answer:
An auditor's question to management about ensuring timely and correct preparation of reconciliations is an example of inquiry, a crucial part of audit procedures aimed at understanding and assessing a company's internal controls and financial accuracy.
Step-by-step explanation:
When an auditor asks management how it makes sure the reconciliation is prepared correctly and on a timely basis, this is an example of inquiry as part of an audit procedure. Auditors use various methods to gather evidence about the accuracy and reliability of a company’s financial statements. Inquiry involves the auditor seeking information from knowledgeable parties, both internal and external to the company.
Specifically, for reconciliations, auditors may ask questions to understand the process, controls in place to ensure accuracy, who is responsible for the reconciliations, the frequency with which they are performed, and how the company investigates and resolves any discrepancies identified. This gives the auditor insight into the internal control environment and whether the reconciliations are likely to be reliable. The auditor might follow up with additional procedures, such as inspection, observation, or testing of reconciliations to validate the responses from management.