Long Term Investments

Question 1

Analytical procedures are effective and efficient in evaluating what?

Answer 1

completeness

Question 2

Valuation Assertion

Answer 2

Reflecting changes in the investee’s equity (examine copies in the investee company)

Question 3

Existence

Answer 3

Publicly traded stock is commonly held by a custodian on behalf of the investor. It would be most efficient and effective to confirm the number of shares owned with the independent custodian.

Question 4

If an auditor is unable to count securities at the balance sheet date then the auditor must

Answer 4

tell client to conceal the box so the auditor knows no securities were added or subtracted

Question 5

In an effort to justify the reasonableness for dividends

Answer 5

the auditor will find relevant information electronically