Professional Documents
Culture Documents
Finance and Investment Cycle
Finance and Investment Cycle
Finance and Investment Cycle
Chapter 10
Presentation Outline
I. Overview of Finance and Investing
Cycle
II. Audit of Liabilities and Stockholders’
Equity
III. Audit of Investments
D. Control Considerations
• Transactions authorized by BOARD OF DIRECTORS
• Documentation:
– Investments in securities: BROKER'S ADVICE
– Property, plant and equipment: VENDOR'S INVOICE
(for purchased PPE) or INTERNAL COST RECORDS
(for manufactured PPE)
– Bonds and notes payable: Documentation from
DEBTHOLDERS
– Stockholders' Equity: Documentation from REGISTRAR
• CASH RECEIPTS/DISBURSEMENTS JOURNALS
Estimates
A sample of accounting estimates are provided on
the top of p. 368. Specific aspects of estimate
development an auditor considers include:
Summary
• Accounts involving Investments, Property-Plant
and Equipment, Debt, and Equity
• Inherent risk for leases, loan covenants, related
parties, complex transactions, and big baths
• Estimate process and evaluation
• Audit of liabilities and stockholders’ equity
• Value of investments and amount of investment
income