22-27 The following audit procedures are commonly performed by auditors in the verification of owner's equity: 1. Review articles of incorporation and bylaws for provisions about owners' equity. 2. Analyze all owners' equity accounts for the year and document the nature of any recorded change in each account. 3. Confirm capital stock transactions with the stock registrar and transfer agent. 4. Confirm shares issued and outstanding with the stock registrar and transfer agent. 5. Review the minutes of the board of directors' meetings for the year for approvals related to owner's equity. 6. Recompute earnings per share. 7. Review debt provisions and senior securities with respect to liquidation preferences, dividends in arrears, and restrictions on the payment of dividends or the issue of stock. Required: a. State the purpose of each of these seven audit procedures. b. List the type of misstatements the auditors can uncover by the use of each audit procedure.

22-27 The following audit procedures are commonly performed by auditors in the verification of owner's equity: 1. Review articles of incorporation and bylaws for provisions about owners' equity. 2. Analyze all owners' equity accounts for the year and document the nature of any recorded change in each account. 3. Confirm capital stock transactions with the stock registrar and transfer agent. 4. Confirm shares issued and outstanding with the stock registrar and transfer agent. 5. Review the minutes of the board of directors' meetings for the year for approvals related to owner's equity. 6. Recompute earnings per share. 7. Review debt provisions and senior securities with respect to liquidation preferences, dividends in arrears, and restrictions on the payment of dividends or the issue of stock. Required: a. State the purpose of each of these seven audit procedures. b. List the type of misstatements the auditors can uncover by the use of each audit procedure.

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 23RQSC

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