Week 11 Investing Cycle Part 2 audio

Views:
 
Category: Education
     
 

Presentation Description

Part 2 of 3

Comments

Presentation Transcript

Chapter 10 :

Chapter 10 Finance and Investment Cycle “ Credit has done a thousand times more to enrich mankind than all the goldmines in the world. It has exalted labor, stimulated manufacture and pushed commerce over every sea. ” --Daniel Webster 10- 1

SUBSTANTIVE TESTS–INTEREST-BEARING LIABILITIES:

SUBSTANTIVE TESTS–INTEREST-BEARING LIABILITIES Agree to BEGINNING BALANCE and CONFIRM with holders or makers. LOAN PROCEEDS VOUCH to cash receipts Recalculate Discount/Premium Confirm IBL, examine note LOAN PAYOFF Recalculate Interest Expense Recalculate Gain/Loss on Retirement Verify cash disbursements 10- 2

INTEREST-BEARING LIABILITIES:

INTEREST-BEARING LIABILITIES INTEREST PAYMENTS Recalculate Interest Expense Search for UNRECORDED liabilities Inquiry of management Bank confirmations Unusual amounts of interest expense Large receipts of cash during the year Ensure DEBT COVENANTS are met. Inspect loan agreements. Consider GOING CONCERN implications if not met. Ensure proper presentation and disclosure. 10- 3

Exhibit 10.5 Audit Documentation:

Exhibit 10.5 Audit Documentation 10- 4

AUDITING STOCKHOLDER'S EQUITY:

AUDITING STOCKHOLDER'S EQUITY Overview of audit approach Transactions must be authorized by the BOARD OF DIRECTORS Transactions must be consistent with the client's ARTICLES OF INCORPORATION EXTERNAL PARTIES involved in record keeping Registrar – confirm shares issued and outstanding Transfer agent 10- 5

AUDITING STOCKHOLDER'S EQUITY:

AUDITING STOCKHOLDER'S EQUITY PAID-IN CAPITAL Agree balances to prior year documentation Examine issuances and repurchases of capital stock Verify distribution of proceeds between CAPITAL STOCK and ADDITIONAL PAID-IN CAPITAL Examine CASH RECEIPTS and CASH DISBURSEMENTS records 10- 6

AUDITING STOCKHOLDER'S EQUITY:

AUDITING STOCKHOLDER'S EQUITY RETAINED EARNINGS Agree beginning balance with prior year documentation Verify the appropriateness of prior-period adjustment treatment Trace net income/loss to INCOME STATEMENT Ensure that DIVIDENDS are properly authorized by BOARD OF DIRECTORS 10- 7

authorStream Live Help