3. Explain disclosure assertions issues related to investments Audit? 4. For each of the following substantive...

3. Explain disclosure assertions issues related to investments Audit?

4. For each of the following substantive procedures, first note whether it is a test of details of transactions or a test of details of account balances. Then decide for which assertion the test provides the best evidence.

a. Trace large cash receipts and payments to the source documents and the general ledger.

b. Examine copies of note and bond agreements.

c. Recompute accrued interest payable.

d. Review debt activity for a few days before and after year-end to determine whether transactions are included in the proper period.

e. Examine due dates on notes and bonds for proper classification between current and long term debt.

Expert Solution

3. Assertions related to audit on investments:

a. Completeness: This assertion is that all investment balances have been fully reported. This can be done by verifying whether the effect of purchases, sales, Income transactions that occured during the period were recorded.

b. Existence: This asssertion is that balances are actually adjusting as on balance sheet date. This assertion can be satisfie by verifying whether purchases, sales, investment revenue resulted from transactions occured during the period.

c. Rights and Obligations: This assertion is that the entity has the rights to the investments disclosed. This can be satisfied by verifying that investments were made in the name of the entity.

d. Presentation and disclosure: This asssertion is that the entity has presented these accounts in the financial statement as per applicable accounting standards and GAAP.

4. a). Test of transactions, related assertion Existence

b). Test of details of account balances. Completeness, Existence

c). Test of details of account balances. Completeness, Existence

d). Test of details of transactions. Assertion: Cut off

e). Test of details of transactions. Assertion: Existence

ekkarill92 answered 1 year ago

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