Its Friday, and that means its time for the weekly pop quiz. The first to post the correct answers to the following questions will win a $10 gift certificate to Starbucks . Good luck! Here we go: AUD Question 1: In establishing the existence and ownership of a long-term investment in the form of publicly traded stock, an auditor should inspect the securities or: A. Correspond with the investee company to verify the number of shares owned. B. Inspect the audited financial statements of the investee company. C. Confirm the number of shares owned that are held by an independent custodian. D. Determine that the investment is carried at the lower of cost or market. Question 2: A client has a large and active investment portfolio that is kept in a bank safe deposit box. If the auditor is unable to count the securities at the balance sheet date, the auditor most likely will: A. Request that the bank confirm to the auditor 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 auditor can count the securities at a subsequent date. Question 3: In confirming with an outside agent, such as a financial institution, that the agent is holding investment securities in the clients name, an auditor would most likely gather evidence in support of managements financial statement assertions of existence or occurrence and: A. Valuation or allocation. B. Rights and obligations. C. Completeness. D. Presentation and disclosure. Question 4: In testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of the: A. Completeness of recorded investment income. B. Classification between current and noncurrent portfolios. C. Valuation of marketable equity securities. D. Existence of unrealized gains or losses in the portfolio. Question 5: An auditor testing long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the: A. Existence of unrealized gains or losses in the portfolio. B. Completeness of recorded investment income. C. Classification between current and non-current portfolios. D. Valuation of marketable equity securities.
Posted on: Fri, 14 Feb 2014 16:37:56 +0000
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