Audit of Drawing Power (DP) w.r.t Working Capital

Whenever we are auditing drawing power w.r.t working capital loans, we calculate it based on quarterly statements submitted  by the company to banks. My question is how to verify the figures mentioned in such quarterly statements with books?

Also, what is the resolution if discrepancies arise between the values as per books & quarterly statements?

Replies (2)
Quick Summary
This discussion focuses on auditing drawing power (DP) for working capital loans. It addresses how auditors can verify figures in quarterly statements submitted to banks against the company's own accounting records. The thread also explores the resolution process for discrepancies, suggesting reporting material differences and discussing findings with management first.

If the discrepancies are materially larger in compared to the quantum of the loan then it's better to withhold and report and disclose as per standards.
Nice Queston.

To verify following points must be taken into consideration:

1. Verify the opening balances of Books of Accounts with the Audit report of borrower.

2. Check bank statements to ensure that entries have been passed into correct party account.

3. One may also check party balances with the Thirty party statements or balance confirmation certificates.

4. Check whether physical balances of stocks tallied with Books.

5. Check other elements of Current Assets and Current Liabilities to ensure their correctness level.


If after checking any discrepancies appears, then one must report to the bank or lender. But before that, as a professional courtesy it must be discussed with the management first.

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