Inventory And Securities Practice Test

You are auditing a nonissuer and the entity holds $12 million of marketable equity securities at year-end, recorded at fair value. The securities are maintained in a brokerage account and management provided a year-end brokerage statement downloaded from the broker’s portal. Controls over investment recording are moderate, but you noted the controller has full access to initiate and record trades. What is the most appropriate method to confirm the existence of investment securities?

In an audit of a nonissuer, the entity has investments in certificates of deposit (CDs) held at multiple banks, and management provided copies of CD statements. You also noted one CD is pledged as collateral for a loan. What is the most appropriate method to confirm the existence of investment securities?