Lee, CPA, the continuing auditor of Wu, Inc., is beginning to audit the common stock and treasury stock accounts. Lee has decided to design substantive procedures without relying on the company’s internal control system.
Wu has no par and no stated- value common stock, and it acts as its own registrar and transfer agent. During the past year, Wu both issued and reacquired shares of its own common stock, some of which the company still owned at year- end. Additional common stock transactions occurred among the shareholders during the year.
Common stock transactions can be traced to individual shareholders’ accounts in a subsidiary ledger and to a stock certificate book. The company has not paid any cash or stock dividends. There are no other classes of stock, stock rights, warrants, or option plans.

What substantive audit procedures should Lee apply in examining the common stock and treasury stock accounts?

  • CreatedSeptember 22, 2014
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