Question

An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure is to Provide the data necessary to prepare a proof of cash. Detect kiting activities that may otherwise not be discovered. Seek information about other deposit and loan amounts that come to the attention of the institution in the process of completing the confirmation. Request that a cutoff bank statement

Answer 1

Answer: Seek information about other deposit and loan amounts that come to the attention of the institution in the process of completing the confirmation.

Step-by-step explanation:

An auditor needs to find out the source of a company's transactions that meet a materiality limit in order to ensure that the company was operating within the confines of the law in those transactions.

In the year of audit therefore, the auditor should request information from banks that the company transacted with so that they can find out relevant information about loans and deposit amounts to make sure that indeed the banks loaned out and received these amount.