Financial Assertions and Audit Objectives. You are engaged to examine the financial statements of Spillane Company for the year ended December 31. Assume that on November 1, Spillane borrowed $500,000 from Second National Bank to finance plant expansion. The long-term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Due to the unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To use the borrowed funds, management decided to invest in stocks and bonds and on November 16, invested the $500,000 in publicly traded securities Required:
Develop specific assertions (audit objectives) related to securities (assets) based on management’s five (PCAOB) general assertions.

Assertion 1) Existence or occurrence: the company must provide the loan documents along with proof that they actually purchased the stocks and bonds using the loan money. It would also help to have a document explaining why the building site couldn't be acquired as planned.

Assertion 2) Rights and obligations: all the legal paperwork regarding the loan, the mortgage on the existing plant and the stocks and bond paperwork must be presented.

Assertion 3) Completeness: all the relevant information must be readily available including building titles, inventories, equipment, cash receipts, etc. The auditor should be allowed to physically visit the plant and confirm the documents.

Assertion 4) Valuation and allocation: information regarding the current market values of the building, inventories and equipment should be given. The auditor should be able to confirm if the depreciation values and market values are consistent. Also, the auditor must have access to accounts receivables and should be able to analyze them to check for any inconsistencies.

Assertion 5) Presentation and disclosure: the auditor should be able to check expense accounts and capitalization accounts, and analyze them. E.g. equipment or machinery repairs must be treated as expenses and not capitalized.

match the scenarios with terms related to financial aid.

pell grant

student loan

merit-based scholarship

richard is one of the leading college basketball players in the state of florida. he also maintains a good academic record. looking at his talent and potential, furman university offers to bear the expenses for his college education.

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anita wants to pursue a certificate program in sports nutrition. to pay for the course, she borrows money by filing the fafsa.

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nathan comes from a low-income household. he wants to pursue an undergraduate degree in marketing. he receives financial aid covering 50 percent of his college expenses. nathan does not have to pay back this amount.

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