IIA Exam IIA-CHAL-QISA Topic 1 Question 6 Discussion

Actual exam question for IIA's IIA-CHAL-QISA exam

Question #: 6
Topic #: 1

An organization invests excess short-term cash in trading securities Which of the following actions should an internal auditor take to test the valuation of those securities'*

AUse the equity method to recalculate the investment carrying value

BConfirm the securities held by the broker.

CPerform a calculation of premium or discount amortization.

DCompare the carrying value with current market quotations

Show Suggested Answer

Suggested Answer: D

Testing Valuation: The valuation of trading securities requires comparing their carrying value with current market prices to ensure accuracy.

Market Quotations: Current market quotations provide the most reliable and up-to-date information on the fair value of securities.

Accounting Standards: This approach is consistent with accounting standards that require securities to be reported at fair value, reflecting any unrealized gains or losses.

Verification Process: Comparing the carrying value with market quotations helps verify that the securities are appropriately valued on the financial statements.

International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) regarding fair value measurement.

by Kirk at Jun 28, 2024, 11:07 PM

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Timothy

4 months ago

Wait, are we trading securities or playing the stock market? I'm just going to choose the funniest-sounding option, which is C.

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Anissa

3 months ago

Dino: Option C does sound pretty interesting, let's consider that as well.

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Salina

3 months ago

I'm not sure about those options, I'm leaning towards option C and performing a calculation of premium or discount amortization.

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Dino

4 months ago

I agree, but I think we should also consider option D and compare the carrying value with current market quotations.

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Katina

4 months ago

I think we should go with option A, using the equity method sounds like a solid way to test the valuation.

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Rima

5 months ago

I see your point, Edwin. It's always good to have multiple methods to ensure accuracy.

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Edwin

5 months ago

But wouldn't it also be important to confirm the securities held by the broker?

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Eun

5 months ago

I agree with Thurman, that seems like the most accurate way to test the valuation.

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Josefa

5 months ago

Hmm, I'm not sure. The equity method seems a bit overkill for trading securities. I'd go with D, just to be safe.

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Carlton

5 months ago

Option B seems like the easiest way to go. Just confirm the securities with the broker and you're good to go.

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Carin

3 months ago

Comparing the carrying value with current market quotations is essential to ensure the securities are accurately valued.

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Reuben

3 months ago

Using the equity method could also provide a more accurate valuation of the investments.

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Rodney

3 months ago

I agree, confirming with the broker is a straightforward way to verify the securities.

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Fidelia

4 months ago

Yes, using the equity method to recalculate the investment carrying value could provide a more accurate valuation as well.

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Hassie

4 months ago

But wouldn't it also be important to compare the carrying value with current market quotations to ensure accuracy?

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Margot

4 months ago

I agree, confirming with the broker is a straightforward way to verify the securities.

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Thurman

5 months ago

I think we should compare the carrying value with current market quotations.

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Herschel

5 months ago

I think the correct answer is D. Comparing the carrying value with current market quotations is the best way to test the valuation of the trading securities.

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Rory

5 months ago

I think it's important to always stay updated with the current market values.

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Cristy

5 months ago

I agree with you, D seems like the most logical choice.

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