Test of Details of Transactions
Generally effective when low volume of transactions.
Standard substantive tests in this category are:
1. Inspect and count securities on hand
2. Confirm securities held by others
3. Vouch the individual debits and credits in the various investment accounts (sample basis usually)
Fair value method: Verify year-end market price of securities
Equity method: DR to documentation of investor’s share of the investee’s earnings. CR to documentation of dividends received from investees or worksheets calculating periodic amortization of the excess of cost over underlying book value.
4. Recalculate investment revenue earned