Question
Financial Assertions and Audit Procedures. You were engaged to examine the financial statements of Kingston Company for the year ended December 31. Assume that on
Financial Assertions and Audit Procedures.You were engaged to examine the financial statements of Kingston Company for the year ended December 31. Assume that on November 1, Kingston borrowed $500,000 from North Country Bankto finance plant expansion. The long-term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Because of the unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To make use of the borrowed funds, management decided to invest in stocks and bonds, and on November 16 the $500,000 was invested in securities. |
Required:
Describe a complete an audit program for collecting relevant evidence for the audit of investments in securities at December 31.
Approach:
Develop specific assertions related to investments in securities at December 31 based on the five principle assertions.
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