How Would You Verify Investments?

Investment may be represented by certificates, bonds, allotment letter or scrip or they may be in the shaped of inscribed stock. Except in case of inscribed the auditor must actually inspect the securities. He should see that the certificate are made in the name of the client and are duly signed and sealed. In case these are lodged with bankers, he should be obtained a certificate from them stating that they held the securities in safe custody as at the date of the balance sheet on behalf of the client.

As regard to bearer bonds, the auditor should see that all coupons for interest not yet due are attached thereto. In regards to script, he should see that all installments of call moneys so far paid by the client are duly acknowledged. As regard inscribed stock, the same can be verified by requesting the bank in whose books the stock is inscribed to confirm the fact of the stock having been registered in the client's name. If the shares are purchases, the proper allocation between capital and revenue must receive the auditor's attention. In case of a new issue, the allotment letter and receipts for the installments and paid should be examined.