When a client company does not maintain its own capital stock records, the auditors should obtain written confirmation from the transfer agent and registrar concerning:
A)restrictions on the payment of dividends.
B)the number of shares issued and outstanding.
C)guarantees of preferred stock liquidation value.
D)the number of shares subject to agreements to repurchase.

Question

Quizplus · Accepted Answer

When a client company does not maintain its own capital stock records, the auditors should obtain written confirmation from the transfer agent and registrar concerning the number of shares issued and outstanding. This is essential to ensure that the company's financial statements accurately reflect the shares issued and outstanding for various calculations such as earnings per share. The other options listed may also be important, but obtaining confirmation of the number of shares issued and outstanding is the most crucial in this scenario.

When a Client Company Does Not Maintain Its Own Capital