Choice "D" is correct. In auditing the granting of stock options, the auditor would normally trace the transactions to approval by the board of directors.
Choice "b" is incorrect. The Secretary of State would not be able to confirm the granting of stock options.
Choice "c" is incorrect. Verifying the existence of option holders provides little evidence to support management's financial statement assertions.
Choice "a" is incorrect. Converted stock options may be distributed from authorized common shares rather than treasury stock.
