You are working on the audit team of Wringer Ltd and you have been given the responsibility of auditing the investments auditor. You have been provided with the following information.

1. During the year some shares were sold at a profit of \($182,900\) and the proceeds were reinvested in shares of other companies.

2. There were no purchases or sales of fixed-interest investments in the year ended 30 June 2015.

In the year ended 30 June 2014, some of the fixed-interest investments were sold and others were purchased using the proceeds of sale.

3. Extracts from the draft financial report for 30 June 2015 are shown below.

Income and expenditure account for year ended 30 June

Required

Describe the audit work you would carry out:

a. to verify income from investments — your audit tests should verify that all the income from the investments has been received by the charity and included in the financial statements, including dividends from the shares in listed investments bought and sold during the year

b. to verify the ownership of the fixed interest investments and shares in listed companies.

Transcribed Image Text:

Income and expenditure account for year ended 30 June Income 2015 2014 $ $ 44 200 41 900 From fixed interest investments From shares in listed companies 123 900 123 500 168 100 165 400 Extract from balance sheet as at 30 June Cost of investments $ Fixed-interest investments 511 200 $ 511 200 Shares in listed companies 1445 600 1 262 700 1956 800 1773 900