Phung, CPA, has been engaged to audit the financial statements of Vernon Distributors, Inc., a continuing audit client, for the year ended September 30. After obtaining an understanding of Vernons internal control system, Phung set control risk at the maximum level for all financial statement assertions concerning investments. Phung determined that Vernon is unable to exercise significant influence over any investee and none are related parties.

Phung obtained from Vernon detailed analyses of its investments in domestic securities showing

The classification among held-to-maturity, trading, and available-for sale securities.

A description of each security, including the interest rate and maturity date of bonds and the par value and dividend rate of stocks.

A notation of the location of each security, either in the treasurers safe or held by an independent custodian.

The number of shares of stock or face value of bonds held at the beginning and end of the year.

The beginning and ending balances at cost and at market, and the unamortized premium or discount on bonds.

Additions to and sales from the portfolios for the year, including date, number of shares, face value of bonds, cost, proceeds, and realized gain or loss.

Valuation allowances at the beginning and end of the year and changes therein.

Accrued investment income for each investment at the beginning and end of the year, and income earned and collected during the year.

Phung then prepared the following partial audit program of substantive audit procedures:

1. Foot and crossfoot the analyses.

2. Trace the September 30 balances to the general ledger and financial statements.

3. Trace the beginning balances to the prior years working papers.

4. Obtain positive confi rmation of the investments held by any independent custodian as of the balance sheet date.

5. Determine that income from investments has been properly recorded as accrued or collected by reference to published sources, by computation, and by tracing to recorded amounts.

6. For investments in nonpublic entities, compare carrying value to information in the most recently available audited fi nancial statements.

7. Determine that all transfers among held-to-maturity, trading, and available-for-sale securities have been properly authorized and recorded.

8. Determine that any other-than-temporary decline in the price of an investment has been properly recorded.

Required:

For procedures 4-8, identify the primary financial statement assertion relative to investments that would be addressed by each of the following objectives.

Primary Assertion Authorization and Presentation and disclosure-classification, accuracy Completeness Existence or occurrence Valuation or allocation Valuation and allocation