Audit of Investment Aaa ternExistence Valuation Completeness Rights and obligations Presentation and disclosure Audit assertions for investments ported on the financial statements re ruly reflect their actual e reporting date, All investments that should have been recorde recorded. The client has ownership rights for all inve nents have been properly classified and a nthe notes to financial stAudit Assertions for Investments Existence and valuation assertions are usually the most relevant assertions in the audit of investments. This is Lel-Xer- UES -m atmo Lal eteare alla alee Nae) (Uec1 tle aloe oF] Eee) of investments. Hence, we need to pay more attention to the areas related to these two audit assertions.Audit Procedures for Investments In the audit procedures for investments, we need to test various audit assertions, including existence, valuation, completeness, and rights and obligationsAudit Procedures for Investments mee) de aid) | sy OREN RMN um mciacelly ecutsseieecs ela Oh TiN AN UatarsiaellE Insc at ue eur alec iar Re Rare Zea Erceelte (ck © Example: tests of completeness of the investments include: Request the schedule of all investments from the client (if the client doesn’t Dene mec tena gt kell) Neto Mue eesti Ramer NAC eet Racers Reconcile the beginning balance in the schedule to the previous year ENencensccutes CCD Re ea Rete sagen Pee nut accetcc tay caeeAudit Procedures for Investments Ceca VCR Coa no econo R UC aa Mouse oa) RCC uno coos Un eta Cc eect Cuenca acer aire Tee © Perform direct confirmation with the brokerage (for investments held by broker) © Physically inspect all investments (for investments held by the client) Men Te eee er ane et eee a cee MesAudit Procedures for Investments ® VALUATION In the audit of investments, we test the valuation assertion to ensure that the investment balances are mathematically correct and their values reflect eel Meteolte lle Caceres Toate eC COS cla) ol seme MOLLE e eM Neel (elo l mci Ls POM oe lo Raa MU eae ae OMe Mula Ciel elm lerdal) cee eT Rae eco oT ele value, have been properly recorded © Recalculate interest income or dividend income from investmentsAudit Procedures for Investments © RIGHTS AND OBLIGATIONS We test the rights and obligations assertion to ensure that the client has the right and ownership of all investments shown on the financial statements as at reporting date. Our concern here is that there may be some restrictions that are placed on investments. Example: tests of rights and obligations in the investment audit Tate te ( Inquire management about any restrictions placed on investments. © Examine related documents to determine whether there are any ct alee (luoAuditing Investments: Substantive Procedures © Agree balances to Prior Year Documentation oD at hce nomena Yeen tray MVOC RP) XO) ea PUNY OCT) © Examine BOARD MINUTES for authorization Comer ene cece Cn © VOUCH to BROKER'S ADVICE, CASH RECEIPTS RECORDS, and BOARD UCR ESS © Recalculate gain or loss on sale © Read minutes for sales of Investments and trace to recordingAuditing Investments: Substantive Procedures (cont.) Deen ENL dt AVS CBTE) © Obtain 12/31 marker price from Wall © Evaluate for possible PERMANENT DECLINES PHYSICALLY INSPECT or CONFIRM securities Verify Certificate Numbers to ensure that there were Sateen Re Seen eters ts aa ee od eee as © Can inspect at interim, ifsafe-deposit box Dyectp AULD) aN DUA NOL © Examine CASH RECEIPTS records eer Reed Re ase Rw Evaluate presentation in BALANCE SHEET (hort term vs. long-term asset)Trouble Spots in Audits of Investments © Valuation of investments at cost, market, or value impairment that is other than temporary. OD ereyrelan Ronan Conc Ren @tlcel i aes derivative securities used as a hedges © Determination of the fair value of derivatives and securities, including valuation models and the ScerNerat lol Conte COMET Orson © Determination of significant influence relationship for equity method investments.Derivative Investments, Hedging Activities, and Investments in Rica rats (oon vaN 74) © Inquiries about the nature of investments and the reasons for holding them, ena cnr ees Rood WT Re see Cen Con Une Melia Lar Mec Len CCTM MnnTUe com cUINLSO LT Rac unrealized gains and losses on investments. © Due to the complexity of SEAS 133 (Accounting for Derivative Securities and Hedging FeO KOR Merde ce nna nent teens hedging transactions, to ensure that effective controls are in place to monitor Seneca keener anteAuditing Fair Value Measurements (SAS 101) COM COU an ton ery er iam OO eee Ry Meme earl SoMS Cab oCereeN ENTLY) Coe RCSIU LLY OS TODO NNTUS ccm eA © If not known—management can use their own assumptions Cece