You have been engaged to audit the financial state-ments of Broadwall Corporation for the year ended December
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2. The company is to maintain a debt: equity ratio not to exceed 2: 1.
3. The company is not to pay dividends without permission from the bank.
4. Monthly installment payments are to commence July 1, 2014. In addition, during the year, the company also borrowed, on a short- term basis, substantial amounts just prior to the year- end from the president of the company.
Required:
a. For the purposes of your audit of the Broadwall Corporation’s financial statements, what procedures should you employ in examining the described loans? Do not discuss internal control.
b. What are the financial statement disclosures that you should expect to find with respect to the loan from the president?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
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