You are in charge of the audit of the financial statements of Hawk Corporation for the year ended December 31. The corporation has a policy of investing its surplus cash in marketable securities. Its stock and bond certificates are kept in a safe-deposit box in a local bank. Only the president and the treasurer of the corporation have access to the box.
You were unable to obtain access to the safe-deposit box on December 31 because neither the president nor the treasurer was available. Arrangements were made for your staff assistant to accompany the treasurer to the bank on January 11 to examine the securities. Your assistant has never examined securities that were being kept in a safe-deposit box and requires instructions. To inspect all the securities on hand should not require more than one hour.
Required
A. List the instructions that you would give to your assistant regarding the examination of the stock and bond certificates kept in the safe-deposit box. Include in your instructions the details of the securities to be examined and the reasons for examining these details.
B. Upon returning from the bank, your assistant reported that the treasurer had entered the box on January 4. The treasurer stated that the purpose of the January 4 visit to the safe-deposit box had been to remove an old photograph of the corporation's original building. The photograph was reportedly loaned to the local chamber of commerce for display purposes. List the additional audit procedures that are required because of the treasurer's action.