Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Colleen has decided to omit the other financial statements because there was a net loss during the past year. Is Colleen behaving in a professional manner by omitting some of the financial statements? Justify your answer.What types of information about their businesses would owners be willing to provide bankers? What types of information would owners not willing to provide?What types of information about a business would bankers want before extending the loan?What common interests are shared by bankers and business owners?

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Answered: Colleen Fernandez, president of Rhino…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter2: The Auditor’s Responsibilities Regarding Fraud And Mechanisms To Address Fraud: Regulation And Corporate Governance

Section: Chapter Questions

Problem 8CYBK

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Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Colleen has decided to omit the other financial statements because there was a net loss during the past year.

Is Colleen behaving in a professional manner by omitting some of the financial statements? Justify your answer.
What types of information about their businesses would owners be willing to provide bankers? What types of information would owners not willing to provide?
What types of information about a business would bankers want before extending the loan?
What common interests are shared by bankers and business owners?

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