Describe the manner in which each of the above procedures might be tested.
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Following are typical questions that might appear on an internal control questionnaire for investments in marketable securities.
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Is custody of investment securities maintained by an employee who does not maintain the detailed records of the securities?
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Are securities registered in the company name?
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Are investment activities reviewed by an investment committee of the board of directors?
Describe the manner in which each of the above procedures might be tested.
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- Following are typical questions that might appear on an internal control questionnaire for investments in marketable securities. Is custody of investment securities maintained by an employee who does not maintain the detailed records of the securities? Are securities registered in the company name? Are investment activities reviewed by an investment committee of the board of directors? Describe the purpose of each of the above controls.Following are typical questions that might appear on an internal control questionnaire for investments in marketable securities. Is custody of investment securities maintained by an employee who does not maintain the detailed records of the securities? Are securities registered in the company name? Are investment activities reviewed by an investment committee of the board of directors? Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of control risk.In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? O Is access to investment securities restricted to at least two authorized officials? O Are the duties of authorization, custody, recording keeping and valuation of investment securities transactions segregated? O All of the choices. O Are investment securities acquisitions and disposals properly authorized by the board of directors?
- Which of the following audit procedures would not likely be performed for audits of investments?a. Read board of directors’ minutes for authorization of investment strategies.b. Confirm investments with registrar.c. Confirm investments with broker or trustee.d. Compare valuation to published market prices.When auditing an investment in another company, an auditor most likely would seek to conduct which audit procedure to help satisfy the valuation assertion?a. Inspect the stock certificates evidencing the investment.b. Examine the audited financial statements of the investee company.c. Review the broker’s advice or canceled check for the investment’s acquisition.Audit Objectives and Procedures for Investments. In the audit of investment securities, auditors develop specific audit assertions related to the investments. They then design specific substantive procedures to obtain evidence about each of these assertions. Following is a selection of investment securities assertions:1. Investments are properly described and classified in the financial statements.2. Recorded investments represent investments actually owned at the balance-sheet date.3. Investments are properly valued at the balance-sheet date.Required:For each of these assertions, select the following audit procedure that is best suited for the audit plan. Select only one procedure for each assertion. A procedure may be selected once or not at all. a. Trace opening balances in the general ledger to prior-year audit documentation.b. Determine whether employees who are authorized to sell investments have access to cash.c. Examine supporting documents for a sample of investment…
- 23. In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? Group of answer choices Are the duties of authorization, custody, recording keeping and valuation of investment securities transactions segregated? Are investment securities acquisitions and disposals properly authorized by the board of directors? Is access to investment securities restricted to at least two authorized officials? All of the choices.When auditing an investment in another company, an auditor most likely would seek to conduct which audit procedure to help satisfy the valuation assertion?a. Inspect the stock certificates evidencing the investment.b. Examine the audited financial statements of the investee company.c. Review the broker’s advice or canceled check for the investment’s acquisition.d. Obtain market quotations from The Wall Street Journal or another independent source.In establishing the existence and ownership of an investment held by a corporationin the form of publicly traded stock, an auditor should inspect the securities or(1) obtain written representations from management confirming that the securitiesare properly classified as trading securities.(2) inspect the audited financial statements of the investee company.(3) confirm the number of shares owned that are held by an independent custodian.(4) determine that the investment is carried at the lower of cost or market.
- In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? A. Is there independent review of investments measured at fair value based on market valuation? B. Is investment income independently recalculated? C. All of the choices D. Are investment records periodically reconciled to actual listing of investments (example: per count ot investment custodian statement)?In performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? a. Are investment records periodically reconciled to actual listing of investments (i.e., per count or investment custodian statement)? b. Is there independent review of investments measured at fair value based on market valuation? c. Is investment income independently recalculated? d. All of the choicesIn performing risk assessment procedures for investments, an auditor may inquire of the client personnel which of the following questions? Group of answer choices 4. All of the choices 1. Is investment income independently recalculated? 2. Are investment records periodically reconciled to actual listing of investments (i.e., per count or investment custodian statement)? 3.Is there independent review of investments measured at fair value based on market valuation?