[Illustrative Checklist] for Verification of Capital to be Followed by the Auditor (Part-3)
- News|Blog|Account & Audit|
- 2 Min Read
- By Taxmann
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- Last Updated on 27 June, 2023
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Effective verification of capital and reserves is crucial for auditors to ensure the accuracy and reliability of an entity’s financial statements. In this third part of the illustrative checklist, we delve into key areas that auditors should focus on when examining capital and reserves. The checklist encompasses a wide range of topics, including compliance with laws and regulations, management representations, presentation and disclosure, as well as specific considerations for partnership entities and sole proprietary entities. By following this checklist, auditors can systematically evaluate the adequacy and appropriateness of the entity’s capital and reserves, providing assurance to stakeholders and enhancing the credibility of the financial statements.
I. How should the auditor recognize the potential impact of non-compliance with laws and regulations on the financial statements as per Standard on Auditing (SA) 250, Consideration of Laws and Regulations in an Audit of Financial Statements
II. Has the auditor acquired sufficient knowledge of the legal and regulatory framework within which the client operates
III. Whether the auditor has checked the compliance with the provisions of the Companies Act, 1956 governing the matters relating to share capital and reserves in the audit of capital and reserves of companies
IV. Whether the auditor has checked the Articles of Association of the entity have provisions relating to share capital and reserves
V. Has the auditor verified whether there are conditions in the State Co-operative Societies Acts regarding the minimum paid-up capital for cooperative societies
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