STATEMENT ON AUDITING PROCEDURE
(Supersedes Statement on Auditing Procedure No. 34)
1. The purpose of this Statement is to furnish guidance in applying generally accepted auditing standards to examinations of the financial statements of companies with long-term invest-ments accounted for under either the cost method or the equity method. Such investments may be represented by capital stock or other equity interests, bonds and similar debt obligations, and loans and advances that are in the nature of investments. This statement is concerned mainly with evidential matter which should be examined by the auditor in corroboration of (a) amounts at which long-term investments are stated in financial statements of the investor, (b) amounts reported as the investor's share of earnings or losses and other transactions of the investee, and (c) related disclosures.
Objectives of Examination
2. The independent auditor should ascertain whether long-term investments are accounted for in conformity with generally accepted accounting principles consistently applied, and whether
Issued by the Committee on Auditing Procedure American Institute of Certified Public Accountants
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