In your audit of the Whitestable Company's December 31, 1999 financial statements, you become aware of the
Question:
In your audit of the Whitestable Company's December 31, 1999 financial statements, you become aware of the following controls or procedures over investments, debt, and equity:
a. On June 15, 1999, the board of directors established criteria for selecting debt and equity investments.
b. Policies have been established for selecting debt or equity financing.
c. On a monthly basis, interest and loan payment amounts are prepared or updated.
d. All internally held securities are maintained under lock and key in a fireproof vault within the treasurer's office.
e. All unissued securities are maintained and periodically checked by personnel independent of cash activities.
Required:
For each control procedure, indicate:
(a) a potential error or fraud that might be prevented or detected as a result of the control procedure and
(b) what control objective is served by the control procedure. Organize your answer as follows:
Step by Step Answer:
