The management of Tory Bank Ltd suspects that a bank loan officer frequently made loans to fictitious companies, disbursed loan proceed to his wife’s accounts, and then the loan has been written-off as irrecoverable. Some significant facts about the loan officer include

•A high standard of living, explained as the result of sound investments and not taking vacations

•An expensive personal car obtained through business contacts

•Gasoline and repair bills submitted for an assigned company car that is higher than company average (mileage logs were submitted on a quarterly basis)

•Marked annoyance with questions from auditors

The most appropriate trend analysis to indicate this potential fraud is

The auditor finds a situation where one person has the ability to collect receivables, make deposits, issue credit memos, and record receipt of payments. The auditor suspects the individual may be stealing from cash receipts.

Which of the following audit procedures would be most effective in discovering fraud in this scenario?

Auditing standards require that the auditor and the client agree on the terms of the engagement. The agreed terms must be in writing and the usual form would be a letter of engagement. Any other form of appropriate contract, however, may be used.

Which of the following is NOT a benefit of an engagement letter in respect of assurance services?