When there is a large number of negotiable securities in multiple locations, careful planning of the physical inspection and count of the securities by the auditor is necessary to guard against:

Question

Quizplus · Accepted Answer

The correct answer is C because when there are multiple locations with large numbers of negotiable securities, there is a risk that securities counted at one location could be moved and presented as part of the inventory at another location, misleading the auditor about the actual total holdings. This substitution could hide theft, losses, or mismanagement. Options A, B, and D are concerns in auditing securities, but the specific scenario of careful planning for physical inspection across multiple locations directly addresses the risk of substitution of securities to misrepresent holdings.

When There Is a Large Number of Negotiable Securities in Multiple