Of the following, which is the most efficient audit procedure for verification of interest earned on bond investments?
A)Tracing interest declarations to an independent record book.
B)Recomputing interest earned using the interest rate and bond amount.
C)Confirming the interest rate with the issuer of the bonds.
D)Vouching the receipt and deposit of interest checks.

Question

Quizplus · Accepted Answer

Recomputing interest earned using the interest rate and bond amount is the most efficient audit procedure for verification of interest earned on bond investments as it provides a mathematical validation of the interest earned. Tracing interest declarations to an independent record book, confirming the interest rate with the issuer of the bonds, and vouching the receipt and deposit of interest checks are all valid procedures but may be more time-consuming and less reliable than recomputing the interest.

Of the Following, Which Is the Most Efficient Audit Procedure