chap13// 13.7 Flashcards
subs. prdrs for investment
- investment has limited cut off issues so adtr can perform prdrs and verify for investment related income at year end
- initial prdrs
- verify opening bal with closing bal from working papers of previous period closing bal
2.review any unusual investment related trsn in investment acc which require investigation
3.check for addition and disposal from entity prepared schedule for accuracy and agreement with accounting records
- compare details from schedule and subsidiary ledgers with GL control acc
2.anal prdrs
limited to only comparing interest and dividend revenues with investment balances to search for unexpected bal as it could indicate MM
- test of trsn
- vouch purchases and sales of investment by examining BROKERS ADVICES And approval
- review minutes for directors’ authorization
- provides evi for occurrence, ownership of securities and AVA
- For completeness, verify purchase and and pmt trsn
5.completeness for sale of investment, verify existence of recorded investment asset
- vouch dividends and interest receipt to remittances advices accompanying the pmt. is a limitation to completeness as wrong recording or fraud not easily identified
7.dividend paid by listed company checked against work relating to dividend pmt
- unlisted companies, verify dividend against copies of FS
- test of BAL
1.inspecting or confirming recorded investment, verifying income from investment and checking marketing value
- need to access controls if entity hires a service org e.g for broker
3.prds will depend on whether they are listed or not
- test of BAL//listed companies
1.inspect broker statement for existence evidence
2.direct confirmation from broker at year end
-provides evi for existence, R&O, completeness, classification and presentation
- test of BAL//securities held at the entity’s premises
- inspection and counting should be conducted at the same time as cash count.
2.ensure custodian is present thr”out counting an obtain a signed receipt upon return of securities.
- adtr should control securities until counting is completed
- test of BAL//stored in bank safety deposit
- bank have the boxes sealed and will confirm to adtr no access was given to box.
- prepare reconciliation from date of count to year end for intervening period if count not performed at year end
- test of BAL//inspection of securities
should observe:
-certificate number
-number of share issued
-name of issuer
-name of owner
-description of the security
-value of security
- test of BAL//securities
1.all securities should be checked against the records in the investment registered securities purchased in previous years, they should be compared with those shown on previous working papers
- a lack of agreement could suggest unthorised trsn
- provide evi for existence , completeness, R&O, classification, presentation
- test of BAL//securities held outsiders
external confirmation sent to holders but also adtrs should be receiving the responses directly
- test of BAL//securities he;d by creditors
- confirmation sent to provide evi for existence, completeness, R&O
- test of BAL//investmnegt income
- perform calculations by using dividend record books info
- can also used entity prepared investment schedule
- verify date of declaration, amt declared and payment date using dividend record books
- test of BAL//interest
1.verify bond certificates
- evidence for completeness, existence and accuracy
