Page 60 - eBook Audit Of Financial Statement Components
P. 60
Audit assertions for share capital
Share capital reported on the balance sheet really exists at
Existence
the reporting date.
Completeness All share capital transactions that should have been
recorded have been recorded.
Share capital balances are valued in accordance with
Valuation
applicable accounting standards.
Present and Sufficient information about share capital have been
properly disclosed in accordance with applicable
disclosure
accounting standards.
7.3 Audit Procedures for Share Capital
The substantive approach usually be used in the audit procedures
for share capital. This is due to the number of transactions related
to the share capital is usually small. In this case, the test of details
usually be performed in the audit work by testing various
assertions, including existence, completeness, and valuation as well
as present and disclosure.
i. Existence and Completeness
Existence assertion tests whether the share capital on the
balance sheet actual exists while completeness assertion
tests whether all share capital transactions have been
recorded.
Example: test of existence and completeness assertions in
the audit of share capital
• Obtain the client’s articles of incorporation, bylaws
and board meeting minutes
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