State the procedures an auditor should follow to verify the issue of share capital (a) For cash,
Question:
State the procedures an auditor should follow to verify the issue of share capital
(a) For cash,
(b) For consideration other than cash, and
(c) For employees as ‘sweat equity share’.
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In auditing the issue of share capital distinct procedures need to be followed depending upon whether the shares are issued for cash for considerations other than cash or as sweat equity for employees Below are the verification procedures for each case a Shares Issued for Cash 1 Verification of the authorization The auditor should verify that the companys management has appropriately authorized the issue of share capital in accordance with the companys bylaws and that any statutory requirements such as approvals from the board of directors or shareholders have been obtained 2 Cross verification with Bank Account To verify the cash receipt the auditor should cross check the bank statement to verify that the cash received aligns with the issue of the share capital 3 Verification of entries The auditor should check that appropriate entries have been made in the books of accounts and that the share capital has been appropriately represented in the balance sheet b Shares Issued for Consideration ...View the full answer
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