Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 15, Problem 32FOQ
When a client uses paper stock certificates, an auditor is most likely to trace
- (1) Numbered stock certificates on hand.
- (2) Articles of incorporation.
- (3) Year’s interest expense.
- (4) Minutes of the audit committee.
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Which of the following audit procedures would be most relevant when examiningthe completeness transaction-related audit objective for capital stock?(1) The auditor examines minutes of the board of directors’ meetings to identifyany actions involving the issuance of capital stock.(2) The auditor vouches entries in the client’s capital stock records to board minutes.(3) Confirmations of new stock issuances are sent to the client’s stock transfer agent.(4) The auditor traces entries of new stock issuances to the cash receipts journal.
The auditor has a responsibility to design audit procedures to obtain sufficient and appropriate evidence. Apply two types of audit procedures that the auditor might use to support each of the following.
i. Physical attendance at stock take
ii. Valuation of accounts receivable
iii. Balance in Bank
iv. Authorised and paid-up share capital
v. Accounts payable
The 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 documents
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
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A client has a large and active investment portfolio that is kept in a bank safe deposit box. If the auditors are unable to count securities at the balance sheet date, they most likely willa. Request the bank to confirm to the auditors the contents of the safe deposit box at the balance-sheet date.b. Examine supporting evidence for transactions occurring during the year. c. Count the securities at a subsequent date and confirm with the bank whether securities were added or removed since the balance-sheet date.d. Request the client to have the bank seal the safe deposit box until the auditors can count the securities at a subsequent date.arrow_forwardNeed all parts solution, DON'T USE AI.arrow_forwardWhen an auditor sends out bank confirmations at the year-end audit, they are performing a(n) O analytical procedure. O test of the details of balances. O key item test. O test of the details of transactions.arrow_forward
- Which of the following are audit evidences? a) Inspecting non-current/fixed assets b) An item of inventory/stock that is present at the inventory/stock count c) A bank statement d) Counting cash balance of the firm e) A paper showing reconciliation of debtors control account with debtor sub-ledger f) A sales invoice g)Inquiry on fraud or theft happened during the year Only e) , f) ,g) and a) Only a) , d) and g) Only f) , c) and e) Only b) , c) , e) and f)arrow_forwardWhich of the following procedures would a CPA most likely perform in planning a financial statement audit?a. Make inquiries of the client’s lawyer concerning pending litigation.b. Perform cutoff tests of cash receipts and disbursements.c. Compare financial information with nonfinancial operating data.d. Recalculate the prior-years’ accruals and deferrals.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
- Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events?a. Recompute a sample of large-dollar transactions occurring after the date of the financial statements for arithmetic accuracy.b. Investigate changes in shareholders’ equity occurring after the date of the financial statements.c. Send confirmations to vendors with whom the client normally does business but for which no balance in accounts payable is noted.d. Confirm bank accounts established after the date of the financial statements.arrow_forwardWhich of the following are audit procedures? a) Inspecting non-current/fixed assets b) An item of inventory/stock that is present at the inventory/stock count c) A bank statement d) Counting cash balance of the firm e) A paper showing reconciliation of debtors control account with debtor sub-ledger f) A sales invoice g) Inquiry on fraud or theft happened during the year Only b) , c) , e) and f) Only a) , d) and g) Only a) , b) and d) Only a) , b) ,d) and g)arrow_forwardA1) Which of the following would the auditor most likely perform when auditing the bank reconciliation for a December 31 year-end audit? a. Confirm the audit client’s book balance shown on the bank reconciliation directly with the bank. b. Verify the audit client’s book balance shown on the bank reconciliation to the Cash balance in the audit client’s trial balance and general ledger. c. Subtract the outstanding check amounts from the audit client’s book balance. d. Verify the deposits in transit amounts to the audit client’s December bank statement.arrow_forward
- QUESTION 1 Observing the client's stocktake enables the auditor to establish that: O a. items belonging to the client are accurately counted and recorded. O D. count tags, sheets or cards are properly controlled. OC the client's personnel are complying with the instructions for stocktakes. O d. All of the abovearrow_forwardWhich of the following procedures would most likely help an auditor identify events after the date of the financial statements that should be disclosed? A.Review changes in the interest rate for cash accounts. B.Follow up on accounts receivable confirmations that were not returned for additional loss accruals. C.Inquire about changes in capital stock that was issued or repurchased. D.Evaluate depreciation schedules for additional depreciation expense.arrow_forwardDescribe the audit procedures you would use to learn about each of the situations listed. Begin by identifying all of the audit procedures you would use to learn about situation 1. (Select the 4 choices that apply.) A.Analyze legal expense for the period under audit and review invoices and statements of legal counsel for indications of contingent liabilities. B.Review records for unusual journal entries made to the equity accounts (Common stock and Retained earnings) subsequent to year-end. C.Discuss, specifically, any related party transactions with management and include information in letter of representation. D.Obtain letters from all major attorneys performing legal services for the client as to the status of pending litigation or other contingent liabilities. E.Confirm details of stock transactions with registrar and transfer agent. F.Review financial statements of affiliate, and where related party transactions are apparent, make direct…arrow_forward
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