ACT 4497 Lecture ch18

ACT 4497 Lecture ch18 - Assurance Services and the...

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Unformatted text preview: Assurance Services and the Integrity of th Modern Auditing: Modern Auditing: Financial Reporting, 8 Edition California Polytechnic State University at San Luis Obispo William C. Boynton Portland State University Raymond N. Johnson Chapter 18 – Auditing Investments and Cash Balances Chapter Overview Chapter Overview Auditing Investments Auditing Investments Investments – Audit Objectives Investments – Audit Objectives Consideration of Internal Controls – Consideration of Internal Controls – Common Documents and Records • Stock certificate • Bond certificate • Bond indenture • Broker’s advice Consideration of Internal Controls – Consideration of Internal Controls – Common Documents and Records • Broker’s statement • Books of original entry • Investment subsidiary ledger Functions and Related Controls Functions and Related Controls • Authorize Investment Transactions – Purchasing securities – Selling securities • Receive or Deliver Securities – – – – Receiving securities Safeguarding securities Delivering securities Receiving periodic income Functions and Related Controls Functions and Related Controls • Record Transactions – Recording purchases, sales, and income – Recording market adjustments and reclassifications – Reviewing purchases, sales, and income transactions • Settle Transactions – Receiving cash – Disbursing cash – Assessing investment performance and reporting Preliminary Audit Strategies for Preliminary Audit Strategies for Investments Substantive Tests of Investments Substantive Tests of Investments • Tests of Details of Balances – Inspect and Count Securities on Hand – Confirm Securities Held by Others – Recalculate Investment Revenue Earned • Tests of Details of Accounting Estimates – Proper Classification of Investments Substantive Tests of Investments Substantive Tests of Investments • Auditing the Fair Value of Investments • Tests of Details of Presentation and Disclosure Auditing Cash Balances Auditing Cash Balances Cash Balances – Audit Objectives Cash Balances – Audit Objectives Preliminary Audit Strategies for Cash Preliminary Audit Strategies for Cash Balances Substantive Tests for Cash Balances Substantive Tests for Cash Balances • Tests of Details of Transactions – Perform Cash Cutoff Tests • Cash Receipts • Cash Disbursements – Trace Bank Transfers • Kiting • Bank Transfer Schedule Substantive Tests for Cash Balances Substantive Tests for Cash Balances • Tests of Details of Transactions – Count Cash on Hand • Cash Counts – Tests to Detect Lapping • Confirm Accounts Receivable • Make a Surprise Cash Count • Compare Details of Cash Receipts Journal Entries with the Details of Corresponding Daily Deposit Slips Substantive Tests for Cash Balances Substantive Tests for Cash Balances • Tests of Details of Balances – – – – Confirm Bank Deposit and Loan Balances Confirm Other Arrangements with Banks Scan, Review, or Prepare Bank Reconciliations Obtain and Use Bank Cutoff Statements • Tests of Details of Presentation and Disclosure ...
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