[Illustrative Checklist] for Verification of Capital & Reserve to be Followed by the Auditor | Part-2
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
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- Last Updated on 21 June, 2023
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The verification of capital is a crucial task for auditors in order to ensure the accuracy and completeness of capital-related information in financial statements. An effective audit procedure is essential to properly account for and disclose capital in the financial statements. The auditor’s examination encompasses various aspects, such as capital issuance, changes, subscriptions, payments, and compliance with applicable laws and regulations. To facilitate this process, an illustrative checklist can be utilized, offering a systematic approach to verify capital. This checklist serves as a valuable tool in organizing the audit process and ensuring that all relevant aspects are thoroughly addressed. By following the checklist, the auditor can assess the adequacy and legitimacy of capital transactions and provide assurance regarding the reliability of capital-related disclosures.
I. Has the auditor verified whether the company has issued any sweat equity shares?
II. Has the auditor examined whether the provisions of Section 54 of the Companies Act, 2013 have been complied with regarding the issuance of sweat equity?
III. Has the auditor verified whether the company has conducted any buy-back of its own shares?
IV. Has the auditor examined whether the company has complied with the applicable rules, such as SEBI (Issue of Sweat Equity) Regulations, 2002 for listed companies or Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003 for unlisted companies, in relation to the issuance of sweat equity?
V. Has the auditor examined whether the conditions and procedures specified in Sections 68 to 70 of the Companies Act, 2013 have been followed for the buy-back of shares?
VI. Has the auditor examined whether the buy-back of shares was conducted in compliance with the SEBI (Buy-back of Securities) Regulations, 1998 for listed companies?
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