Question

Describe what audit procedures you (the auditor) likely performed which resulted in your discovery of these subsequent events.

5. South Face declared a cash dividend of $2.00/common share outstanding on December 27, 2019. The dividend is payable on February 3, 2020 to the common shareholders of record on the declaration date. No entries have been made in the accounting records in relation to this declaration. There were 425,210 common shares outstanding on December 27, 2019.

Answer 1

Audit procedures likely performed which resulted in discovery of declaration of cash dividend are followings:-

1) Auditor should check that the board must declare the dividend at a board meeting and record the dividend declaration in the meeting minutes.

2) Auditor should check that minutes have been record the dividend amount and when the company expects to pay it.

3) Auditor should verify that Cash dividend declared would be accounted in the same year.

4) Cash Dividend declared should be account for in the financial statements on 27 December 2019 with the amount of $850420. (425210 shares @ &2/- Common share)

5) On 3rd Feb, 2020 Need to check bank account statement that Company should pay declared dividend to share holders at declared rate.