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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Substantive |
Existence/ Occurrence (E/O) |
Rights & obligations (R/O) |
Completeness (C) |
Valuation and allocation/Accuracy (V/A) |
Presentation & disclosure (P/D) |
a. Inspect securities on hand and confirm securities held by custodian. |
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b. Trace serial number indicated in the security to the list of investment securities maintained by the client |
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c. The investment securities listed on the schedule of investment transactions of the client are mathematically accurate and agree with the general ledger. |
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d. Read minutes of meeting of board of directors regarding investments used as collateral for borrowings. |
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e. Recalculate gains and losses on sale of securities. |
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f. Recalculate interest and dividend revenues. |
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g. Inspect securities simultaneously with count of other liquid assets. |
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h. Verify fair values of securities with published price quotations. |
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i. Obtain an understanding on management’s process in classifying investment securities. |
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j. Evaluate client’s procedures on assessing impairment of investments. |
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k. Perform cut-off test on acquisition and disposal of investments and accruals of interests and dividends. |
Requirement:
Check the management assertions that are being validated by the above substantive audit
procedures.
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- An auditor's primary substantive procedures for investments typically include confirmation of securities or evidence of ownership that are held by the client or by a third party. Which of the following assertion(s) is(are) addressed by the audit procedure previously mentioned? * A. I only B. I and V only C. II and V only D. I and VII onlyarrow_forwardWhich of the following audit objectives is to validate the assertion of valuation and allocation? * A. All recorded investments on the statement of financial position exist B. All recorded income from investments has accrued to the entity at the reporting date C. All investments owned by the entity at the reporting date are included on the statement of financial position and all income accruing from investments has been recorded D. Investments are included on the statement of financial position at appropriate amountsarrow_forwardAn auditor's primary substantive procedures for investments typically include impairment testing. Which of the following assertion(s) is(are) addressed by the audit procedure previously mentioned? * A. III only B. IV only C. III and IV D. IV, V and VIIIarrow_forward
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