Substantive audit procedures Existence/Occurrence(E/O) Rights &obligations(R/O) Completeness(C) Valuation andallocation/Accuracy(V/A) Presentation& disclosure(P/D) a. Inspect securities on handand confirm securitiesheld by custodian. b. Trace serial numberindicated in the securityto the list of investmentsecurities maintained bythe client c. The investment securitieslisted on the schedule ofinvestment transactionsof the client aremathematically accurateand agree with thegeneral ledger. d. Read minutes of meetingof board of directorsregarding investmentsused as collateral forborrowings. e. Recalculate gains andlosses on sale ofsecurities. f. Recalculate interest anddividend revenues. g. Inspect securitiessimultaneously with countof other liquid assets. h. Verify fair values ofsecurities with publishedprice quotations. i. Obtain an understandingon management’s processin classifying investmentsecurities. j. Evaluate client’sprocedures on assessingimpairment ofinvestments. k. Perform cut-off test onacquisition and disposalof investments andaccruals of interests anddividends. Requirement: Check the management assertions that are being validated by the above substantive auditprocedures.

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

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 28RQSC

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Substantive audit procedures	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.
b. Trace serial number indicated in the security to the list of investment securities maintained by the client
c. The investment securities listed on the schedule of investment transactions of the client are mathematically accurate and agree with the general ledger.
d. Read minutes of meeting of board of directors regarding investments used as collateral for borrowings.
e. Recalculate gains and losses on sale of securities.
f. Recalculate interest and dividend revenues.
g. Inspect securities simultaneously with count of other liquid assets.
h. Verify fair values of securities with published price quotations.
i. Obtain an understanding on management’s process in classifying investment securities.
j. Evaluate client’s procedures on assessing impairment of investments.
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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