D is corrent because firms will almost always utilize the services of an independent trustee when debentures are outstanding. The trustee will maintain records on the bond transactions during the year.
A is incorrect because debenture holders will generally be able to confirm only balances (as opposed to transactions) at any one point in time.
B is incorrect. Internal auditors will in general have no more detailed information on the debentures than that already available to the auditor from the firm being audited. Also, internal auditors provide internally generated evidence which is not in general considered as reliable as externally generated evidence.
C is incorrect. The client’s attorney does not generally maintain detailed transaction records pertaining to debentures.
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