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    Audit of Capital - Long Term Liabilities-1

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    ALIA MAISARA MD AKHIR
    There are important differences in auditing owners' equity between closely held and publicly held corporations. For closely held corporations, auditors spend little time verifying owners' equity since there are few shareholders and transactions, and dividends are rarely paid. For publicly held corporations, verification is more complex due to larger numbers of shareholders and frequent stock transfers. Verifying major owners' equity accounts includes capital stock, paid-in capital, retained earnings, and dividends. The audit objective is to determine if controls over capital stock and dividends are adequate, transactions are recorded correctly, and balances are properly presented and disclosed. Important internal controls include authorization of transactions, record keeping, and an independent stock transfer agent.

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    Audit of Capital - Long Term Liabilities-1

    Uploaded by

    ALIA MAISARA MD AKHIR
    30 views3 pages
    There are important differences in auditing owners' equity between closely held and publicly held corporations. For closely held corporations, auditors spend little time verifying owners' equity since there are few shareholders and transactions, and dividends are rarely paid. For publicly held corporations, verification is more complex due to larger numbers of shareholders and frequent stock transfers. Verifying major owners' equity accounts includes capital stock, paid-in capital, retained earnings, and dividends. The audit objective is to determine if controls over capital stock and dividends are adequate, transactions are recorded correctly, and balances are properly presented and disclosed. Important internal controls include authorization of transactions, record keeping, and an independent stock transfer agent.

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    Audit of capital long term liabilities

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    AUDIT OF CAPITAL_LONG TERM LIABILITIES-1

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    There are important differences in auditing owners' equity between closely held and publicly held corporations. For closely held corporations, auditors spend little time verifying owners' equity since there are few shareholders and transactions, and dividends are rarely paid. For publicly held corporations, verification is more complex due to larger numbers of shareholders and frequent stock transfers. Verifying major owners' equity accounts includes capital stock, paid-in capital, retained earnings, and dividends. The audit objective is to determine if controls over capital stock and dividends are adequate, transactions are recorded correctly, and balances are properly presented and disclosed. Important internal controls include authorization of transactions, record keeping, and an independent stock transfer agent.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    30 views3 pages

    Audit of Capital - Long Term Liabilities-1

    Uploaded by

    ALIA MAISARA MD AKHIR
    There are important differences in auditing owners' equity between closely held and publicly held corporations. For closely held corporations, auditors spend little time verifying owners' equity since there are few shareholders and transactions, and dividends are rarely paid. For publicly held corporations, verification is more complex due to larger numbers of shareholders and frequent stock transfers. Verifying major owners' equity accounts includes capital stock, paid-in capital, retained earnings, and dividends. The audit objective is to determine if controls over capital stock and dividends are adequate, transactions are recorded correctly, and balances are properly presented and disclosed. Important internal controls include authorization of transactions, record keeping, and an independent stock transfer agent.

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    AUDIT OF STATEMENT OF FINANCIAL POSITION AND COMPREHENSIVE INCOME

    AUDIT OF OWNERS’ EQUITY

    There is an important difference in the audit of owners’ equity between publicly held corporation
    and a closely held corporation.

    A closely held corporation.


    • Few shareholders
    • Few/occasional transactions during the year.
    • Most likely transaction is the change in owner’s equity for annual earnings or loss and
    declaration of dividends
    • Rarely pay dividends
    • Auditor spend little time to verify owners’ equity.

    Publicly held corporation


    • Verification more complex
    • Larger number of shareholders
    • Frequent changes in the individuals holding the stock.

    Verifying the major owners’ equity accounts in publicly held corporation includes:
    • Capital and common stock
    • Paid-in capital in excess of par
    • Retained earnings and dividends

    The objective for audit of owners’ equity is to determine whether:


    1. Internal controls over capital stock and related dividends are adequate.
    2. Owner’s equity transactions are correctly recorded
    3. Owner’s equity balances are properly recorded, presented & disclosed.

    Internal controls which are important in owner’s activity activities:


    1. Proper authorisation of transactions
    2. Proper record Keeping and segregation of duties
    3. Independent register and stock transfer agent

    1
    2
    AUDIT OF LONG-TERM LIABILITIES

    • A legal obligation to a creditor/lender, which may be unsecured or secured by assets and bear
    interest.
    • The repayment period could be less or more than one (1) year depending on the amount and
    the arrangement made between both parties.
    • The purpose of having a loan varies based on different purposes.
    • Properties could be pledged as collateral includes non-current assets, securities, account
    receivable or inventory.

    The objective for audit of long-term liability is to determine whether:


    1. Internal controls over long-term liability.
    2. Transactions for principal and interest involving liability are properly authorised and
    recorded.
    3. The liability and related expenses and accrued liabilities and properly stated.

    Internal controls which are important in long-term liability:


    1. Proper authorisation of transactions
    2. Adequate controls over the repayment of principal and interest.
    3. Proper documents and records.
    4. Periodic independent verification.

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