Скачать с ютуб Auditing of Capital Stock and Paid in Capital | Auditing and Attestation | CPA Exam в хорошем качестве

Auditing of Capital Stock and Paid in Capital | Auditing and Attestation | CPA Exam

IN this session, I discuss of capital stock and paid in capital. ✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/ 📧Connect with me on social media: https://linktr.ee/farhatlectures #cpaexam #accountingstudent #auditcourse Design and perform tests of controls, substantive tests of transactions, and tests of details of balances for capital stock and retained earnings. Auditors have four main concerns in auditing capital stock and paid-in capital in excess of par: Existing capital stock transactions are recorded (completeness transaction-related objective). Recorded capital stock transactions occurred and are accurately recorded (occurrence and accuracy transaction-related objectives). Capital stock is accurately recorded (accuracy balance-related objective). Capital stock is properly presented and disclosed (all four presentation and disclosure objectives). The first two concerns involve tests of controls and substantive tests of transactions, and the last two involve tests of details of balances and related disclosures. Existing Capital Stock Transactions Are Recorded This objective is easily satisfied when a registrar or transfer agent is used. The auditor can confirm with that person whether any capital stock transactions occurred and the accuracy of existing transactions, and then determine if all of those transactions have been recorded. To uncover issuances and repurchases of capital stock, auditors also review the minutes of the board of directors meetings, especially near the balance sheet date, and examine client-held stock record books. Recorded Capital Stock Transactions Occurred and Are Accurately Recorded Extensive auditing is required for transactions involving issuance of capital stock such as the issuance of new capital stock for cash, the merger with another company through an exchange of stock, donated shares, and the purchase of treasury shares. Regardless of the controls, it is normal practice for auditors to verify all capital stock transactions because of their materiality and permanence in the records. The occurrence transaction-related objective can ordinarily be tested by examining the minutes of the board of directors meetings for proper authorization. Auditors can readily verify accurate recording of capital stock transactions for cash by confirming the amount with the transfer agent and tracing the amount of the recorded capital stock transactions to cash receipts. (In the case of treasury stock, the amounts are traced to the cash disbursements journal.) In addition, the auditor must verify whether the correct amounts were credited to capital stock and paid-in capital in excess of par by referring to the corporate charter to determine the par or stated value of the capital stock. Auditing capital stock transactions such as stock dividends, acquisition of property for stock, mergers, or similar noncash transfers is challenging because considerable technical expertise is required and there is often judgment involved to determine proper valuations. For example, in the audit of a major merger transaction, the auditor must often do considerable research to determine the appropriate accounting treatment and proper valuation of the transaction, after considering all the facts in the merger. Capital Stock Is Accurately Recorded Auditors verify the ending balance in the capital stock account by first determining the number of shares outstanding at the balance sheet date. A confirmation from the transfer agent is the simplest way to obtain this information. When no transfer agent exists, the auditor must rely on examining the stock records and accounting for all shares outstanding in the stock certificate records, examining all cancelled certificates, and accounting for blank certificates. After the auditor is satisfied that the number of shares outstanding is correct, the recorded par value in the capital account can be verified by multiplying the number of shares by the par value of the stock. The ending balance in the capital in excess of par account is a residual amount. It is audited by verifying the amount of recorded transactions during the year and adding them to or subtracting them from the beginning balance in the account.