Question
Which of the following are true with respect to the audit of investments?( select that may apply all the option) A. When the shares are
Which of the following are true with respect to the audit of investments?( select that may apply all the option)
A. When the shares are in unlisted companies, more judgement is required by the auditor and there is a higher level of inherent risk, particularly in relation to the accuracy and valuation assertion.
B. When the investment is strategic, the most important audit risk is in relation to ensuring that the market value has been properly assessed.
C. Assessing market value is not a problem for investments that relate to shares listed on the stock exchange, as there is an active market.
D. For most companies, the volume of investing transactions is quite high; therefore, it is generally more effective to use a combined approach in the audit of investment balances.
E. Because of the complexity of accounting for some investments, there is also a heightened risk of fraud in this area.
F. A risk arising from investments that affects the overall audit strategy is that associated with related party transactions.
G. If the company has control, the investment should be accounted for using the equity method of accounting.
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