Share capital - audit process, Auditing

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Share Capital - Audit Process

Share capital is a special type of liability and when it has been issued during the year then verification procedures are as follows:

1. Confirm that the matter is within the limits authorised through Articles and Memorandum of Association.

2. Verify the directors' minutes to ensure about the matter was authorised.

3. Vouch the accurate recording of monies received.

4. Ensure about the correct treatment of any share premium got in so doing keep in mind that the share premium account can merely be required to matter fully paid bonus shares, write off expenses of share or debenture issue, write off preliminary expenses, write off discounts on shares or debentures and to give for a premium payable on the redemption of redeemable priority shares.

5. Check the prospectus whether there was one application, application and allotment sheets, and the cash received records, the share register, share certificate counterfoils and repayment to failed applicants.

6. The payment vouches of underwriting and other fees.

7. When the matter is not for cash therefore for other considerations as the goodwill and their assets of a business, the agreement vouch and ensure about the all entries are appropriately made.

8. Whether the matter was subject to approval from the Nairobi Stock Exchange, after that ensure that approval has been acquired. Whether it has not been acquired all the money subscribed is returnable. Ensure about the all the money was placed in a divide bank account until all conditions were satisfied. Ensure about the minimum subscription has been obtained since if there were not sufficient subscribers then the entire is returnable.

Whenever there is no new matter of shares the audit work involves:

1. Determination of the total shares of all class as stated in the balance sheet and the receiving of a list share holdings that in total should agree along with the balance sheet total.

2. Testing the balances in the share register along with the list and vice versa.

3. Whether the share register is maintained through an independent firm of registrars, the auditor should receive a certificate such the above work has been done.

4. Vouch transfers to such the share register and share transfer forms.


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