Question

You are in charge of the audit of the financial statements of Demot Corporation for the year ended December 31. The corporation has a policy of investing its surplus funds in marketable securities. Its stock and bond certificates are kept in a safe deposit box in a local bank. Only the president and the treasurer of the corporation have access to the box. You were unable to obtain access to the safe deposit box on December 31 because neither the president nor the treasurer was available. Arrangements were made for your assistant to accompany the treasurer to the bank on January 11 to examine the securities. Your assistant should be able to inspect all securities on hand in an hour. Your assistant has never examined securities in the safe deposit box and requires instructions.

Required:
a. List the instructions that you should give to your assistant regarding the examination of the stock and bond certificates kept in the safe deposit box. Include in your instructions the details of the securities to be examined and the reasons for examining these details.
b. After returning from the bank, your assistant reports that the treasurer had entered the box on January 4 to remove an old photograph of the corporation’s original building. The photograph was loaned to the local chamber of commerce for display purposes. List the additional audit procedures that are required because of the treasurer’s action.



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  • CreatedOctober 27, 2014
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