39. To establish effective internal control over a corporation's stock transactions, the corporation shouldutilize the services of an independent registrar and transfer agent.a. Describe the functions performed by the stock registrar.b. Describe the functions performed by the transfer agent.c. Describe the information that is typically requested by the auditors in a confirmation sent to the registrar.a. The stock registrar controls the corporation's issuance of stock to avoid overissuance.b. The stock transfer agent maintains the detail stockholder records and handles the transfer of stock fromone shareholder to another.c. The auditors typically confirm the following information with the stock registrar and transfer agent:
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LO5Assess the risks of material misstatement of debt and equity capital and design further auditprocedures, including tests of controls and substantive procedures, to address the risks.oWhat substantive procedures can we do over debt and equity capital (i.e. confirmations,etc)?Know in detail how these procedures are done, from what the client prepares towhat the auditor does.3. The auditors are required to confirm bond holdings directly with the bondholders.
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5. Long-term liabilities that are maturing must always be classified as a current liability.
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4. The auditors should determine that the issuance of bonds was approved by the company's stockholders.
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12. In auditing long-term debt, an auditor would be most likely to:A.Perform analytical procedures on the bond prenumbered discount accounts.B.Examine documentation of assets purchased with bond proceeds for liens.C.Compare interest expense with the long-term debt amount for reasonableness.D.Confirm the existence of individual long-term debt holders at year-end.
16. The auditor's program to examine interest-bearing debt most likely will include steps that require:
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Notes
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Learning Objective: 15-08 Obtain an understanding of the fundamental controls over capital stock and other types of equity accounts.Topic: DebtTopic: Equity CapitalWhittington - Chapter 15 #3839.To establish effective internal control over a corporation's stock transactions, the corporation shouldutilize the services of an independent registrar and transfer agent.a. Describe the functions performed by the stock registrar.b. Describe the functions performed by the transfer agent.c. Describe the information that is typically requested by the auditors in a confirmation sent to theregistrar.a. The stock registrar controls the corporation's issuance of stock to avoid overissuance.b. The stock transfer agent maintains the detail stockholder records and handles the transfer of stockfrom one shareholder to another.c. The auditors typically confirm the following information with the stock registrar and transfer agent:
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AACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementAICPA FN: Risk AnalysisBlooms: UnderstandDifficulty: MediumLearning Objective: 15-08 Obtain an understanding of the fundamental controls over capital stock and other types of equity accounts.Learning Objective: 15-09 Describe further audit procedures for equity accounts.Topic: Audit Program—Capital StockTopic: Equity CapitalWhittington - Chapter 15 #39
40.In the audit of interest-bearing debt auditors identify audit objectives and then determine appropriateaudit procedures.
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