Final answer:
When auditing financial instruments, interest income and dividends can be recomputed and compared to a public source to ensure accuracy and reliability of financial statements.
Step-by-step explanation:
When auditing financial instruments, interest income and dividends can be recomputed and compared to a public source.
This is done to ensure the accuracy and reliability of the financial statements. By comparing the interest income and dividends received by the company with the information available in public sources, such as financial reports, analysts can make sure that there are no discrepancies or errors.
For example, if a company claims to have earned a certain amount of interest income from its investments, the auditor can verify this by checking public records or financial statements of the institutions where the investments were made.