You Are Engaged in the Audit of Bordon Corporation,whose Records

question 20

Essay

You are engaged in the audit of Bordon Corporation,whose records have not previously been audited by your firm.The company has an independent transfer agent,as well as a registrar for its capital stock.The transfer agent maintains the record of stockholders,while the registrar checks that there is no overissue of stock.Both the transfer agent and registrar are required to validate stock certificates. One of the seniors on the audit proposes that confirmations be obtained from both the transfer agent and registrar regarding the outstanding stock balance at the balance sheet date.If the confirmations agree with the books,then he proposes that no additional work is to be performed on the capital stock account. REQUIRED: Do you agree or disagree that this will be sufficient? If yes,give the justification for your position.If no,state specifically all additional steps you would take and why you would take them.

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Definitions:

Machine-Hours

A measure of the amount of time a machine is operated, used for allocating machine operation costs to products or units produced.

Direct Labor Variances

The differences between the budgeted and actual costs of direct labor, analyzed to understand deviations in manufacturing expenses.

Variable Overhead Cost

Those expenses of operating a business that vary with the level of output or production activity, such as utilities for manufacturing equipment.

Maintenance Costs

Expenses incurred in the upkeep of machinery, buildings, and equipment to ensure efficient operation and prevent breakdowns.