An auditor can verify the Issued capital from balance sheet of the previous year. If there is any increase in the number of shares due to loans or conversion of debentures, the same has to be verified whether all the formalities were as per law.
Share capital is reported by a company on its balance sheet in the shareholder’s equity section. The information may be listed in separate line items depending on the source of the funds. These usually include a line for common stock, another for preferred stock, and a third for additional paid-in capital.
In a nutshell, substantive audit procedures for share capital would include summarizing and reviewing all the equity-related transactions, their proper classifications, reconciliation of the opening balances to the balance as on the reporting date, and further reviewing disclosure for compliance in accordance with the …
1. The auditor should examine the Director’s Minute Book and verify whether they approved the allotment. 2. He should vouch the entries made in the Application and Allotment Book with copies of letters of allotment and letters of regret.
(1) The auditor should study the Articles to ascertain that the reduction of Share Capital is authorized by the Articles. ADVERTISEMENTS: (2) He should then inspect the special resolution for reducing the Share Capital and verify that the meeting for such a resolution was convened properly.
What is capital audit?
Audits ensure that employees complete transactions according to the organization’s accounting policies. … Auditors frequently check for required approvals for capital transactions. These are transactions involving long-term items such as fixed assets or long-term debt.
ALLOTMENT STAGE. a) The auditor should see that allotment begins only after the receipt of minimum subscription. b) He should examine the Directors’ Minute Book to see that all the allotments have been approved by the Board.
Stock audit or inventory audit is a term that refers to physical verification of a company or institution’s inventory assets. Every business organization needs to perform an audit once a year to update and ensure that the physical stock and the computed stock match.
Share suspense account is a temprorary a/c created, to transfer any receipts on shares issue or re-issue (in case of forefeiture) is case of a pending decision regarding that receipt.
Capital reduction is the process of decreasing a company’s shareholder equity through share cancellations and share repurchases, also known as share buybacks. The reduction of capital is done by companies for numerous reasons, including increasing shareholder value and producing a more efficient capital structure.
What are the procedures for such reduction?
The Following procedure is to be followed for Reduction of Share Capital of a Company
- Convene a Meeting of Board of Directors. …
- Making the disclosure of the Board meeting [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015] …
- Convene General Meeting. …
- Filing of forms with ROC [Section 117]