To determine whether facts support management's intent to hold securities to maturity, an auditor might:
A)study the entity's cash flow forecasts.
B)obtain published market quotations.
C)compare fair value of the securities to cost.
D)confirm that the securities are held by a broker.

Question

Quizplus · Accepted Answer

To determine whether facts support management's intent to hold securities to maturity, an auditor would need to study the entity's cash flow forecasts to determine if they anticipate selling the securities before maturity. This would help the auditor determine if management's intent is consistent with their actions and the facts presented. Obtaining published market quotations may be useful in determining the fair value of the securities, but does not necessarily indicate whether management intends to hold them to maturity. Comparing fair value to cost may also be useful in assessing the financial reporting implications of holding to maturity, but does not necessarily provide information about management's intent. Confirming that the securities are held by a broker may be useful in determining custody and ownership, but does not necessarily provide information about management's intent.

To Determine Whether Facts Support Management's Intent to Hold Securities