The transactions in the stockholders' equity accounts are typically tested using a

statistical sampling approach.

-False
Which of the following procedures is a typical substantive procedure related to the
relevant assertion of completeness for debt obligations?
-Confirming debt obligations with relevant outside parties
In those audits where there is a heightened risk of fraud related to stockholders' equity
accounts, which of the following will the auditor typically not perform?
-Review equity authorizations in the board meeting minutes
Which of the following is not important documentation for substantive procedures for
capital stock and equity transactions?
-A memo regarding audit ideas generated during the brainstorming session regarding
potential frauds applicable to the capital stock and equity transactions
In its 2004 through 2006 inspections, which of the following was not a deficiency the
PCAOB noted related to inadequate testing of stockholders' equity transactions?
-The auditors failed to disclose each class of stock issued by the clients
Which of the following is a typical substantive procedure related to the relevant
assertion of presentation and disclosure for debt obligations?
-Reviewing debt agreements for the restrictive covenants
Rights/obligations is the most relevant audit assertion associated with an inherent risk
for finding stock options or warrants being granted without being properly approved.
-False
Substantive testing
-an audit procedure that examines the financial statements and supporting
documentation to see if they contain errors
-needed as evidence to support the assertion that the financial records of an entity are
complete, valid, and accurate.
Examples of substantive tests
-issuing bank confirmations
-confirming debt balances
-reviewing board minutes
In auditing equity accounts, the auditor primarily focuses on which of the following two
assertions?
-Presentation & Disclosure and Valuation
Which of the following is not true regarding the testing of transactions in the
stockholders' equity accounts?
-The transactions are typically tested on a sampling basis.
For both debt accounts and stockholders' equity accounts, the boxes of evidence would
typically be filled only with evidence obtained through substantive procedures.
-True