What Are The Methods Which Are Used By The Auditor To Vouch The Investments And Loans?

If the investment purchased through a broker, broker's sold note showing the exact amount payable should be checked. The original investments should also be physically examined to ensure their existence and for acquiring satisfaction that they stood in the name of the client. If share certificates have not yet been issued letters of allotment and banker's advice should be seen. In case of dividend purchase of investments the auditor should see that the correct allocation between the capital and revenue is done and interest dividend is subsequently received.

Similarly loan agreements should be checked. If the loan is against mortgagee, the mortgage deed will state the amount of the loan and should be examined together with the title deed and certificates. The payee acknowledgment receiving the loan should be inspected. If the loan is secured one the nature of security should be examined the authority for the loan such as the minutes of board of directors or managing director's approval whatever is applicable must be seen. In case of loans to directors of the company, the auditor must see that the provisions of the company's ordinance 1984 are not contravened. In respect of loans to employees the loan account of each staff member should be scrutinized to ensure that regular recoveries are taking place.

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