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Audit Procedures for Equity Misstatements

The document outlines the purpose of control measures in financial statement audits, highlighting potential misstatements related to equity transactions and dividends. It details audit procedures to verify the accuracy and authorization of stock issues, retirements, and earnings per share computations. Additionally, it emphasizes the importance of reviewing disclosures for completeness and legality in financial statements.

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hoangmyduyennguyen2004
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6 views2 pages

Audit Procedures for Equity Misstatements

The document outlines the purpose of control measures in financial statement audits, highlighting potential misstatements related to equity transactions and dividends. It details audit procedures to verify the accuracy and authorization of stock issues, retirements, and earnings per share computations. Additionally, it emphasizes the importance of reviewing disclosures for completeness and legality in financial statements.

Uploaded by

hoangmyduyennguyen2004
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

22-26.

a. b. c.
PURPOSE OF POTENTIAL AUDIT PROCEDURES TO
CONTROL FINANCIALSTATEMENTMIS DETERMINE EXISTENCE
STATEMENT OF MATERIAL
MISSTATEMENT
1. To insure that all Misstatement of dividends Verify authenticity of all
shares issued or retired declared on balance sheet or changes in owners’ equity
are properly authorized payment to the wrong people, account.
which could result in a liability
2. To insure that records Misstatement of owners’ equity Determine if company uses
are properly maintained and the disbursement of services of an independent
dividends and capital to the registrar, or transfer agent.
wrong people Confirm details of equity
accounts with them.
3. To ensure that the Misstatement of owners’ equity Compare minutes with
board of director meeting and earnings per share transactions in equity accounts
minutes are reviewed to and confirm authorizations
reflect equity
transactions
4. To insure that the Misstatement of owners’ equity Trace postings from master file
general ledger reflects and earnings per share and stock certificates into
the balanceof supporting general ledger. Reconcile
records master file to general ledger.
5. To insure that the Misstatement of dividends Obtain confirmation of paid
dividends declared are declared on balance sheet or dividends from
paid to the proper payment to the wrong people, independenttransfer agent.
individuals which could result in a liability
6. To ensure footnotes Omission or misstatement of Examine footnote disclosures
are reviewed for footnote disclosures related to and compare them with board
completeness of equity- equity transactions minutes and equity records
related disclosures

22-27.

a. b.
PURPOSE OF AUDIT PROCEDURES MISSTATEMENTS THAT MAY BE
UNCOVERED
1. To determine what type of stock may be Unauthorized outstanding stock or improper
issued, under what circumstances, and its description of stock
description
2. To determine the propriety of changes in The issuance or retirement of stock without
the accounts and to verify their accuracy proper authorization, improper valuation, or
incorrect dividend calculations
3. To confirm any stock issues, retirements, or Unauthorized or omitted equity transactions
dividends were authorized
4. To verify that earnings per share has been Incorrect earnings per share computation
correctly computed
5. To determine if any stock issues, Unauthorized or omitted equity transactions
retirements, or dividends were authorized.
6. To verify that earnings per share has been Incorrect earnings per share computation
correctly computed
7. To determine that dividends are legal and Illegal payments of dividends and improper
disclosure in the financial statements is disclosure of the information in the financial
proper. statements

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