SUBSTANTIVE PROCEDURES FOR INVESTMENTS

ASSERTIONS AUDIT OBJECTIVES AUDIT PROCEDURES SPECIFIC

Existence or To determine that  Obtain or prepare a  Obtain or prepare an
Occurrence investments in listing of securities analysis of the
securities (shares, and investments investment account
showing the beginning
bonds, notes) owned by the bank
and ending balances,
physically exists and and related revenue
purchases, and sale of
in loans and accounts and investments during the
advances exists. reconcile to the year and interest and
general ledger. dividend earned.
 Inspect securities on  Prepare a separate list
hand. of securities as of the
 Obtain confirmation end of the year that
of securities held by includes the following
others. information (a) Name
of issuer and
description of security;
(b) Serial numbers (c)
Name of owner and
any indorsement,
number of shares or
principal amount; (d)
Cost of carrying
amount if other than
cost; (e) Market price
per unit; (f) Total
market price, location
of securities, if they are
pledged
Completeness To determine that  In addition to audit  Verify a sample of
investments are all procedures 2 and 3, transactions by
included in the vouch selected reference to the
statement of purchases and sales brokers’ advices and
financial position transactions of cash records.
securities during the
year
Rights and To determine that  In addition to audit  Review transactions
Obligations the bank owns or procedures 2 and 3, pertaining to securities
has ownership rights verify the clients’ a few weeks before and
to all investments cutoff of securities after the BS date to
included in the transactions. determine whether
statement of  Perform analytical they are recorded in
financial position. procedures the correct accounting
 Compute period.
independently  Interest income earned
revenue from on notes, bonds can be
securities. verified and compared
with recorded amounts
in the boos of the
client
Valuation To determine that  Determine market  Vouch the acquisition
investments are value of securities at price in the accounting
valued properly in statement of records and compare
accordance with financial position the market price to the
generally accepted date. publication of market
accounting  Evaluate the method quotation of security
principles of accounting for prices.
securities.
Presentation Investments are  Evaluate financial
and properly described statement
Disclosure and classified in the presentation and
statement of related revenue or
financial position loss accounts.
and related
disclosures are
adequate