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Wiley Practitioner's Guide to GAAS 2018, 2nd Edition
book

Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

by Joanne M. Flood
April 2018
Beginner to intermediate content levelBeginner to intermediate
880 pages
28h 54m
English
Wiley
Content preview from Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

AU-C 501 Audit Evidence—Specific Considerations for Selected Items

AU-C Original Pronouncement

Source Statement on Auditing Standards (SAS) 122.

Definitions of Terms

AU-C 501 contains no definitions.

Objectives of AU-C Section 501

AU-C Section 501.03 states that the objective of the auditor is to obtain sufficient appropriate audit evidence regarding the:

  1. Valuation of investments in securities and derivative instruments;
  2. Existence and condition of inventory;
  3. Completeness of litigation, claims, and assessments involving the entity; and
  4. Presentation and disclosure of segment information, in accordance with the applicable financial reporting framework.

Requirements—Investments in Securities and Derivative Instruments

As the accounting standards for investing and related activities have become more complex and detailed, the related auditing guidance has followed suit. Section 501 applies to investments in all securities as well as to derivative instruments and hedging activities.

There are two types of securities—debt securities and equity securities. This section uses the definitions of debt security and equity security that are in the FASB Master Glossary.

Section 501 contains the basic notion that an investee's unaudited financial statements generally do not provide sufficient evidential matter. However, it adds a cautionary note that even audited financial statements might not be sufficient because of factors such as significant differences in fiscal year-ends or ...

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Publisher Resources

ISBN: 9781119396482Purchase book