【正文】 nding, the correct valuation of capital stock transactions, and par value can all be confirmed with a transfer agent. The balance can then be easily recalculated from this information.2216 Since it is important to verify that properly authorized dividends have been paid to owners of stock as of the dividend record date, a parison of a random sample of cancelled dividend checks to a dividend list prepared by management would be inadequate. Such an audit step is useless unless the dividend list has first been verified to include all stockholders of record at the dividend record date. A better test is to determine the total number of shares outstanding at the dividend date from the stock registrar and repute the total dividends that should have been paid for parison with the total amount actually paid. A random sample of cancelled checks should then be pared to the independent registrar39。s invoices and cash disbursements—to determine that original issue taxes have been paid. 8. Compare dividends with stock outstanding at dividend dates—to determine that dividends have been properly paid and also to substantiate the stock outstanding. 9. Review subscription and option contracts, etc.—to determine the facts in regard to subscriptions and options and to determine that these facts have been properly recorded and that they are adequately disclosed.2231 a. The audit program for the audit of Pate Corporation39。 equity and earnings per share.Account for all unissued certificates and account for all cancelled certificates and their mutilation.3. To insure that the general ledger reflects the balance of supporting records.Misstatement of owners39。 equity balances are properly presented and disclosed to satisfy the following presentation and disclosurerelated audit objectives:n Occurrence and Rights and Obligationsn Completenessn Accuracy and Valuationn Classification and Understandability2211 Although the corporate charter and bylaws are legal documents, their legal nature is not being judged by the auditor. They are being used only to reference transactions being tested by the auditor and provide insight into some of the key control features of the pany. The auditor should consult an attorney if the information the auditor needs from the documents is not clear or if a legal interpretation is needed.2212 The major internal controls over owners39。s records to verify that the payments were actually made to valid shareholders.2217 If a transfer agent disburses dividends for a client, the total dividends declared can be verified by tracing the amount to a cash disbursement entry to the agent and also confirming the amount. There should ordinarily be no need to test individual dividend disbursement transactions if a stock transfer agent is used. 2218 The major emphasis in auditing the retained earnings account should be on the recorded changes that have taken place during the year, such as net earnings for the year, dividends declared, prior period adjustments, extraordinary items charged or credited directly to retained earnings, or setting up or elimination of appropriations. Except for dividends declared, the other items should be verified during other parts of the engagement. This is especially true of the net earnings for the year. Therefore, the audit of retained earnings primarily consists of an analysis of the changes in retained earnings and the verification of the authorization and accuracy of the underlying transactions. 2219 For auditing owners39。s capital stock account would include the following procedures: 1. Examine the articles of incorporation, the bylaws, and the minutes of the board of directors from the inception of the corporation to determine the provisions or decisions regarding the capital stock, such as classes of stock, par value or stated value, authorized number of shares, authorization for the sale of new issues or additional sales of unissued stock, declarations of stock splits and dividends in the form of cash or stock, and granting of stock options or stock rights. Determine that the accounting records are in accordance with these provisions or decisions and that appropriate disclosure is made by footnote if necessary. Extract pertinent data for the auditor39。 equity and the disbursement of dividends and capital to the wrong people.Determine if pany uses services of an independent registrar, or transfer agent. Confirm details of equity accounts with them.2. To insure that records are properly maintained.Misstatement of owners39。 equity balances in the financial statements satisfy the following balancerelated audit objectives:n Detail tieinn Existencen Completenessn Accuracyn Classificationn Cutoff4. Owners39。 equity and calculating earnings per share, it is crucial to verify that the number of shares used in each is accurate. Earnings are verified as an integral part of the entire audit and should require no additional verification as a part of owners39。s permanent file. 2. Examine the stock certificate stub book and determine whether the total of the open stubs agrees with the Capital Stock account in the general ledger. Examine cancelled stock certificates, which are generally attached to the corresponding stub. 2231 (continued) Information on the stubs regarding the number of shares, date, etc. for both outstanding and cancelled stock certificates should be pared with the Capital Stock account. All certificate numbers should be accounted for and, if the CPA deems it necessary, confirmation of the number of certificates printed should be obtained from the printer. A test check should be made to determine that the proper amounts of original issue and capital stock transfer taxes have been affixed to the stubs and the cancelled certificates. The stockholders shown in the stock certificate stub book should be pared with the stockholders39。s records is determined faster and mo