Question
Dave and Maria are working on the audit of a major client's financing cycle and activities. Dave's supervisor has recently apprised him that he would
Dave and Maria are working on the audit of a major client's financing cycle and activities. Dave's supervisor has recently apprised him that he would like Dave to check the details and amounts surrounding a recent major bond issue by the client. Dave is unsure as to how to proceed and asks Maria for advice. Which of the following would be helpful suggestions for Maria? (select all that apply)
A. You should plan to meet with the client's bondholders to confirm the existence of bond indentures and certificates.
B. You should consider auditing related interest expense accounts, as a new bond issue would have increased these.
C. You should think about examining the minutes of the previous board of directors meetings, as details of the approval should be contained in those minutes.
D. The easiest thing to do would be to request written assurances from senior management pertaining to the bond issue. We can then include this document in our audit file.
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