Auditing the Capital Accounts. James Husvet, Chartered Accountant (CA) is engaged in the first audit of Sajbos
Question:
Auditing the Capital Accounts. James Husvet, Chartered Accountant (CA) is engaged in the first audit of Sajbos of Budapest, Hungary.
The company has both a stock transfer agent and an independent registrar for its capital stock. The transfer agent maintains the record of stockholders, and the registrar determines that there is no overissue of stock. Signatures of both are required to validate stock certificates.
It has been proposed that confirmations be obtained from both the transfer agent and the registrar as to the stock outstanding at the balance sheet date. If such confirmations agree with the accounting records, no additional work is to be performed as to capital stock.
If Husvet agrees that obtaining the confirmations as suggested would be sufficient in this case, give the justification for Husvet’s position. If Husvet does not agree, state specifically all additional steps Husvet would take and explain Husvet’s reasons for taking them (see Illustration 12.5 ‘Capital Account Balances’).
[AICPA adapted]
Step by Step Answer:
Principles Of Auditing: An International Perspective
ISBN: 9780077095321
1st Edition
Authors: Rick Stephan Hayes, Philip Wallage, Arnold Schilder, Roger Dassen