acctg403, ch12
Terms
undefined, object
copy deck
- bank confirmation
- a standard confirmation sent to all banks with which the client had business during the year to obtain information about the year-end cash balance and additional information about loans outstanding
- bank transfer schedule
- an audit document that lists all transfers between client bank accounts starting a short period before year-end and continuing for a short period after year-end, its purpose is to ensure that cash in transit is not recorded twice, to test for the existence of kiting
- collateral
- an asset or a claim on an asset usually held by a borrower or an issuer of a debt instrument to serve as a guarantee for the value of a loan or security. If the borrower fails to pay interest or princpal, the collateral is available to the lender as a basis to recover the principal amount of the loan or debt instrument
- commercial paper
- note issued by major corporations, usually for short period of time and at rates approximating prime lending rates, usually with high credit rating; its quality may change if the financial strength of the issuer declines
- cutoff bank statement
- a bank statement for a period of time determined by the client and the auditor that is shorter than the regular month-end statements; sent directly to the auditor, who uses it to verify reconciling items on the client's year-end bank reconciliation
- financial instruments
- a broad class of instruments-usually debt securities but almost equity or hedges-that represents financial agreemetns between a party (usually an issuer) and a counter-party (usually an investor) based on either underlying assets or agreemetns to incur financial obligations or make payments; instruments range in complexity froma simple bond to complicated agreemetns containing puts or options
- imprest bank account
- a bank account that normally carries a zero balance and is replensihed by the company when checks are to be written against the account; provides additional control over cash. the most widely used imprest bank account is the payroll account, to which the company makes a deposit equal to the amount of payroll checks issued
- kiting
- a fraudulent cash scheme to overstate cash assets at year-end by recording deposits in transit in both the account from which the cash is withdrawn and the account to which it is transferred
- lockbox
- a cash mgmt arrangement with a bank whereby an organization's customers send payments directly to a post office box number accessible by the client's bank; the bank opens the cash remittances and directly deposits the money in the client's account
- marketable security
- a security that is readily marketable and held by the company as an investment
- turnaround document
- a document sent to the customer to be returned with the customer's remittance; may be machine readable and may contain information to improve the efficiency of receipt processing