Question

You are in charge of the audit of the financial statements of the Demot Corporation for the year ended December 31. The corporation has had the policy of investing its surplus funds in marketable securities. Its share and bond certificates are kept in a safety 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 safety deposit box on December 31 because neither the president nor the treasurer was available. Your assistant will accompany the treasurer to the bank on January 11 to examine the securities but he has never examined securities that were being kept in a safety deposit box and requires instructions. The inspection should only take an hour.

Required:
a. List the instructions you would give for examining the share and bond certificates in the safety deposit box. Include the details of the securities to be examined and the reasons for examining these details.
b. 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 lent to the local chamber of commerce. List the additional audit procedures required because of the treasurer’s action.



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  • CreatedJanuary 09, 2015
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