The following audit procedures are commonly performed by auditors in the verification of owners equity: 1. Review
Question:
The following audit procedures are commonly performed by auditors in the verification of owners’ equity:
1. Review articles of incorporation and bylaws for provisions about owners’ equity.
2. Analyze all owners’ equity accounts for the year and document the nature of any recorded change in each account.
3. Confirm capital stock transactions with the stock registrar and transfer agent.
4. Confirm shares issued and outstanding with the stock registrar and transfer agent.
5. Review the minutes of the board of directors’ meetings for the year for approvals related to owners’ equity.
6. Recompute earnings per share.
7. Review debt provisions and senior securities with respect to liquidation preferences, dividends in arrears, and restrictions on the payment of dividends or the issue of stock.
Required:
a. State the purpose of each of these seven audit procedures.
b. List the type of misstatements the auditors can uncover by the use of each audit procedure.
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a PURPOSE OF AUDIT PROCEDURES b MISSTATEMENTS THAT MAY BE UNCOVERED 1To determine what type of stock ...View the full answer
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