Final answer:
An auditor should inspect the securities or confirm the holdings electronically to establish the existence and ownership of a long-term investment in the form of publicly traded stock.
Step-by-step explanation:
In establishing the existence and ownership of a long-term investment in the form of publicly traded stock, an auditor should inspect the securities or confirm the holdings electronically through a trusted third party.
Publicly traded companies raise funds to finance their operations or new investments by conducting an initial public offering (IPO). An IPO is crucial as it provides the funds to repay early-stage investors, such as angel investors and venture capital firms, and supplies the established company with financial capital for expansion.
Investing in stocks allows investors to receive a return based on the company's performance, and auditors play a critical role by verifying their existence and ownership to maintain investor confidence and ensure the integrity of financial statements.