Most auditors prefer to obtain a signed statement that all investments

Most auditors prefer to obtain a signed statement

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while the securities are being examined. Most auditors prefer to obtain a signed statement that all investments inspected were returned at the completion of the inspection made in the presence of the custodian. In any event, the working papers should note the date of the inspection and the name of the witness to the inspection.(4)The following details of the securities should be examined:a)The name of the registered owner appearing on each security other than bearer bonds should be noted to determine that Pink Corporation is a registered owner and that securities belonging to another owner have not been substituted.b)The name of the corporation issuing the security and the class of the security (Class A, Par Value, 1st Preference, etc.) should be noted for assurance that a lower priced security (perhaps somewhat similar in corporate name or a different security of the issuing corporation) has not been substituted for a higher priced security.c)The face value of bonds and the number of shares represented by each share certificate should be compared with the client record to determine that the entire amount of the corporation’s holdings of each security is on hand.d)The serial numbers of the securities should be compared with those on the record and, for those securities carried over from the prior year, compared with the serial numbers of securities listed in the prior year’s working papers. A change in serial numbers that cannot be properly explained may be an indication of manipulation of the securities. Verification of serial numbers also helps establish the cost of securities sold under either the FIFO or specific identification cost method.e)The certificates should be read to ascertain the interest rates and payment dates for bonds and the dividend rates and payment dates, if given, for preference shares. This information may be used later in the verification of investment revenue.f)Bonds should be examined to determine maturity dates. Maturity dates are needed for verifying the computation of the amortization of bond premiums or discounts. In addition, the maturity dates will disclose whether any bonds on hand have matured. The presence of
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Substantive Tests of Investments 10-3
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  • Spring '13
  • balboa
  • Balance Sheet, ........., Available-for-Sale Securities, Zash Corp

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