Audit and Accounting Guide: Investment Companies

Chapter 11 General Auditing Considerations^1,2

Gray shaded text in this chapter reflects guidance issued but not yet effective as of the date of this guide, July 1, 2018, but becoming effective on or prior to December 31, 2018, exclusive of any option to early adopt ahead of the mandatory effective date. Unless otherwise indicated, all unshaded text reflects guidance that was already effective as of the date of this guide.

Chapter Overview

11.01 This chapter provides selected general auditing considerations on the application of generally accepted auditing standards (GAAS) during an investment company audit. The chapter begins with general audit planning considerations that focus on the audit risk assessment process and the design of audit procedures that respond to identified risks. Audit planning considerations are followed by other general considerations for audits of investment companies. After other general considerations are discussed, the chapter turns to focus on auditing procedures specific to the investment portfolio accounts of an investment company. A variety of relevant subtopics are discussed in this section, including: the custody of securities, tests of portfolio transactions (including transactions with affiliates), income from securities, testing net asset value per share, and testing the valuation of portfolio investments. The chapter concludes with three appendixes that provide detailed considerations pertaining to (a) the auditor’s responsibility for ...