Qusetion: Common Stock and Treasury Stock: Substantive Audit Procedures. You are the continuing auditor of Sussex Inc. and are beginning the audit of the common stock and treasury stock accounts. You have decided to design substantive procedures with reliance on internal controls. Sussex has no-par, no-stated-value common stock and acts as its own registrar and transfer agent. During the past year, Sussex both issued and reacquired shares of its own common stock, some of which the company still owned at year-end. Additional common stock transactions occurred among the shareholders during the year. Common stock transactions can be traced to individual shareholders' accounts in a subsidiary ledger and to a stock certificate book. The company has not paid any cash or stock dividends. There are no other classes of stock, stock rights, warrants, or option plans.
Required: What substantive procedures should you apply in examining the common stock and treasury stock accounts? Organize your answer as a list of audit procedures organized by the financial statement assertions. (See Appendix 10B for examples of substantive procedures for stockholders' equity.)