Disclosures You Are a Staff Auditor on the Audit of Cosmo

question 153

Essay

Disclosures You are a staff auditor on the audit of Cosmo Technologies,Inc.The audit partner asks you to carefully read the new mortgage contract with the Hometown Bank and abstract all pertinent information that might be needed for a financial disclosure. Required: (1)List the information in a mortgage that is likely to be relevant to the auditor.(2)What are the pros and cons of using a disclosure checklist for this task?

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Definitions:

Asset

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

American Option

Call or put option that can be exercised on or before the expiration date.

European Option

A type of options contract that allows the holder to exercise the option only on its expiration date.

Underlying Asset

An asset on which a derivative instrument, such as an option or futures contract, is based, determining its value and performance.