AUDIT PROGRAM FOR INVESTMENT
Legal Company Name Client:
Balance Sheet Date:
Audit Objectives Financial Statement Assertions
Existence or occurrence
Investments reflected in the balance sheet includes securities on hand and in custody of
Completeness
third parties, and physical evidence of ownership exists.
Rights and obligations
Investment transactions and related income or loss are recorded correctly as to account, Existence or occurrence
amount, and period. Valuation or allocation
Investments are properly valued, and loss in value is promptly identified and provided for. Valuation or allocation
Investments are properly segregated between current and non-current assets and are
Presentation and disclosure
disclosed in accordance with IAS.
Audit Procedure Performed By Work Paper Reference
For investments in closely held corporations, partnerships, joint ventures, and investments
carried on the equity method:
1. Prepare or obtain from the client a detailed analysis of such investments, showing
the following:
a. The name of each investee.
b. Percentage of ownership.
c. The accounting policies of the client/investor.
d. The difference, if any, between the amount at which the investment is
carried and the amount of underlying equity in net assets.
2. Read executive partnership or similar underlying agreements and other forms of
supporting documentation.
3. Determine the proper method of accounting for the investment (cost, equity,
consolidation).
4. Obtain and review copies of the investee’s most recent financial statements and
the accompanying audit report, if any, and/or tax returns. If necessary, determine
if an adjustment to record the current year equity investment should be made.
5. Review information in the investor’s files that relates to the investee (e.g., investee
minutes; budgets and cash flow information about the investee).
6. Make inquiries of the investor’s management about, and obtain sufficient
evidence in support of, the investee’s financial results.
7. If the carrying amount of the security reflects factors that are not recognized in
investee’s financial statements or fair values of assets that are materially different
from the investee’s carrying amounts, obtain sufficient evidence in support of
these amounts.
8. If a time lag between the date of the entity’s financial statements and those of the
investee has a material effect on the entity’s financial statements, determine
whether the entity’s management has properly considered the lack of
comparability. Add an explanatory paragraph to the auditor’s report, if a change in
time lag occurs that has a material effect on the investor’s financial statements.
9. Evaluate sufficiency of evidential matter because of significant differences in fiscal
year-ends, significant differences in accounting principles, changes in ownership,
changes in conditions affecting the use of the equity method, or the materiality of
the investment to the investor’s financial position or results of operations.
10. Obtain evidence about material transactions between the entity and the investee
and evaluate (a) the propriety of the elimination of unrealized profits and losses
and such transactions when the equity method of accounting is used to account
for investment under IAS and (b) the adequacy of disclosures about material
related party transactions.
11. For subsequent events and transactions of the investee occurring after the date of
the investee’s financial statements but before the date of the investor auditor’s
report, read available interim financial statements of the investee and make
appropriate inquiries of the investor to identify subsequent events and
transactions that are material to the investor’s financial statements.
12. Determine whether the investment is properly classified in the financial
statements and whether disclosure, if necessary, is made with respect to
summarized information of assets, liabilities, and results operations of the
investee.
13. For an investment accounted for using the equity method, inquire of management
as to whether the entity has the ability to exercise significant influence of the
operating and financial policies of the investee and evaluate the attendant
circumstances that serve as a basis for management’s conclusions.
14. If the entity accounts for the investment contrary to the presumption established
by IAS for the use of the equity method, obtain sufficient evidence about whether
appropriate disclosure is made regarding the reasons for not accounting for the
investment in keeping with that presumption.
15. Evaluate management’s conclusion about the need to recognize an impairment
loss for a decline in the fair value of the investment below its carrying amount that
is other than temporary.
Based on the procedures performed and the results obtained, it is my opinion that the objectives listed in this audit program has been achieve.
Performed By: _______________________________________________________________________________ Date: _______________
Reviewed and Approved By: ____________________________________________________________________ Date: _______________
Conclusions:
Comments:
