16-10 (AICPA, adapted) 16-29 To support financial statement assertions, an auditor develops specific audit proce- dures to satisfy or accomplish each assertion. Required: Items (a) through (c) represent assertions for investments. Select the most appropri- ate procedure from the following list and enter the number in the appropriate place on the grid. (An audit procedure may be selected once or not at all.) Audit Procedure: 1. Vouch opening balances in the subsidiary ledgers to the prior year's audit working papers. 2. Determine that employees who are authorized to sell investments do not have access to cash. 3. Examine supporting documents for a sample of investment transactions to verify that prenumbered documents are used. 4. Determine that any impairments in the price of investments have been properly recorded. 5. Verify that transfers from the current to the noncurrent investment portfolio have been properly recorded. Chapter 16 Auditing the Financing/Investing Process: Cash and Investments 555 6. Obtain positive confirmations as of the balance sheet date of investments held by independent custodians. 7. Trace investment transactions to minutes of board of directors' meetings to deter- mine that transactions were properly authorized. Specific Assertion Audit Procedure a. Verify that investments are properly described and classifled in the financial statements (presentation and disclosure-classification). b. Verify that recorded investments represent investments actually owned at the balance sheet date (rights and obligations). c. Verify that investments are properly valued at the lower of cost or market at the balance sheet date (valuation and allocation). (AICPA, adapted)