Which of the following internal controls is least likely to reduce risks related to the occurrence transaction-related audit objective for issuances of stock?

The following questions concern the audit of accounts in the capital acquisition and repayment cycle. Choose the best response.
a. Which of the following audit procedures would be most relevant when examining the completeness transaction-related audit objective for capital stock?
(1) The auditor examines minutes of the board of directors’ meetings to identify any
actions involving the issuance of capital stock.
(2) The auditor vouches entries in the client’s capital stock records to board minutes.
(3) Confirmations of new stock issuances are sent to the client’s stock transfer agent.
(4) The auditor traces entries of new stock issuances to the cash receipts journal.
b. During an audit of a publicly held company, the auditor should obtain written confir-
mation regarding debenture transactions from the
(1) debenture holders.
(2) client’s attorney.
(3) internal auditors.
(4) trustee.
c. Which of the following internal controls is least likely to reduce risks related to the
occurrence transaction-related audit objective for issuances of stock?
(1) The board of directors must approve the distribution of cash dividends.
(2) The issuance of any shares of stock must be preapproved by the board of directors.
(3) The company engages an independent registrar to issue stock certificates.
(4) The company maintains a capital stock certificate record that includes certificate
number, number of shares issued, issue date, and name of person to whom cer-
tificates are issued.

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