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

Since the client company does not maintain its own capital stock records, the auditors need to obtain confirmation from the transfer agent and registrar regarding the number of shares issued and outstanding. This information is essential to determine the accuracy of the company's financial statements as well as to perform audit procedures related to share-based transactions such as stock issuance, repurchase, and option exercises. While the other choices may also require confirmation from the transfer agent and registrar, they are not directly related to the stock records of the company.

When a Client Company Does Not Maintain Its Own Capital