Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 19RQ
To determine
Explain the source of information regarding a year-end list of stockholders when the services of the independent stock registrar or transfer agent are not used.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following audit procedures are commonly performedby auditors in the verification of owners’ equity:1. Review the articles of incorporation and bylaws for provisions about owners’ equity.2. Analyze all owners’ equity accounts for the year and document the nature of anyrecorded change in each account.3. Account for all certificate numbers in the capital stock book for all shares outstanding.4. Examine the stock certificate book for any stock that was cancelled.5. Review the minutes of the board of directors’ meetings for the year for approvalsrelated to owners’ 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.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 auditprocedure.
The following audit procedures are commonly performed by auditors in the verification of owners’ 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 owners’ 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
State the purpose of each of these seven audit procedures.
List the type of misstatements the auditors can uncover by the use of each audit procedure.
Select any publicly traded company and obtain its most recent 10-K filing.Links to an external site. (within the last two years). Select a different company from your peers.
Assume that you have been assigned as the auditor for this company. Choose one of the topics below to discuss:
Identify the risks the company included in its filing. As the auditor, you need to be aware of these risks, as they could have misstatement implications for multiple financial statement accounts. What concerns should you have about the risk of material misstatement in the financial statements for the company you selected?
Review Footnote Disclosures and discuss any pending litigation. What is the primary concern for auditors and shareholders regarding disclosure of pending litigation?
Discuss any related party transactions in the Footnote Disclosures. What is the primary concern for auditors and shareholders regarding the disclosure of related party transactions?
Chapter 15 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
Knowledge Booster
Similar questions
- Wilson's Corporation is one of your new audit clients. The corporation's accountant is uncertain how to report earnings per share in accordance with IFRS and is requesting that you provide the following information: Define the term 'earnings per share' as it applies to a corporation with a capitalization structure composed of only one class of ordinary shares. Explain how earnings per share should be computed and how the information should be disclosed in the corporation's financial statements.arrow_forwardYour audit team is reviewing the third quarter financial statements of Smirks, Inc., a publicly traded company. The audit manager, Jason, thinks the client may have omitted an important item and has asked you to research whether interim financial statements are required to include earnings per share amounts. Prepare an email responding to Jason’s question. Comment on any other potential ramifications of Smirks, Inc.’s omission that come to mind, which you can offer to research. Please draft one email. Thank you.arrow_forwardThe auditors join client stock take at the year end and see whether the way that they count is in the correct procedures or not. This procedure is an example of: * Observation Inquiry Inspection of tangible assets O Inspection of records and documentsarrow_forward
- Crush Ltd. is a dealer in fast moving consumer goods. The Company has warehousesthroughout the country where the stocks are stored. The Auditor of the Company normally conduct physical verification of stocks along with the Management at the end of thefinancial year. However, the Auditor could not be physically present during stock- taking at two places on account of certain disturbances in the region.In the light of the above facts: (hint: Audit evidence)(i) How sufficient appropriate audit evidence regarding the condition and existence of inventory may be obtained?(ii) How an Auditor is supposed to deal when attendance at physical inventory counting is impracticable?arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- you have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services . (i) The statutory audit of the annual financial statements. (ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors. (a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (including Citations/references) (b) What are the fundamental principles of ethics? Briefly explain their meaning (including Citations/references) (c) A client’s affairs should not be disclosed to third parties. However where a client has been…arrow_forwardDave and Maria are working on the audit of a major client's financing cycle and activities. Dave's supervisor has recently apprised him that he would like Dave to check the details and amounts surrounding a recent major bond issue by the client. Dave is unsure as to how to proceed, and asks Maria for advice. Which of the following would be helpful suggestions by Maria? (Select all that apply.) O You should think about examining the minutes of previous board of directors meetings, as details of the approval should be contained in those minutes. You should plan to meet with the client's bondholders to confirm the existence of bond indentures and certificates. O The easiest thing to do would be to request written assurances from senior management pertaining to the bond issue. We can then include this document in our audit file. O You should consider auditing related interest expense accounts, as a new bond issue would have increased these.arrow_forwardA well-financed audit client of a CPA firm invests large amounts in marketable securities. As part of its internal control, the company uses a monthly report of securities transactions. the report is prepared by the controller and presented to the investment committee of the board of directors. What information should this report contain?arrow_forward
- You have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services . (i) The statutory audit of the annual financial statements. (ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors. Required. (a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (Include citations to support work). (b) What are the fundamental principles of ethics? Briefly explain their meaning (Include citations to support work). (c) A client’s affairs should not be disclosed to third parties. However where a…arrow_forwardABC Company has 100 shares of IBM stock that it holds as an investment. The stock was purchased three years ago and has been in the client’s safe deposit box along with other investment securities. During an inspection of securities held by the client, the auditor noted the 100 shares of IBM stock had a different CUSIP number than the number listed when purchased and the number verified during the previous audit. Which of the followingwould be the auditor’s main concern about this discovery?a. The certificates in the safe deposit box were forgeries.b. There had been unauthorized buying and selling of investment securities.c. The securities may be misclassified on the balance sheet.d. ABC Company no longer owns the securities.arrow_forwardMonicker Co. engaged the audit firm of Gasner & Gasner to audit its financial statements that Monicker was going to use in connection with a public offering of its securities. Monicker's stock regularly trades on the NASDAQ. The audit was completed and the auditor issued an unqualified opinion on the financial statements, which Monicker submitted to the SEC along with the registration statement. Three hundred thousand shares of Monicker common stock were sold to the public at $13.50 per share. Eight months later, the stock fell to $2 per share when it was disclosed that several large loans to two "paper" companies owned by one of the directors were worthless. The loans were secured by the stock of the borrowing corporation and by Monicker stock owned by the director. These facts were not disclosed in the financial statements. The director and the two corporations are insolvent. Considering these facts, indicate whether each of the following statements is true or false, and briefly…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning