Auditing of share capital

Points to be considered for audit of share capital

A private limited company has two types of share capital:

 

• Equity share capital
• Preference share capital

EQUITY SHARE CAPITAL
This type of share capital is that part of capital that is not a preferential. In other words it is the basic kind of capital or an ordinary share capital.

PREFERENTAL SHARE CAPITAL

This part of capital has the following characteristics:
• It carries a preferential right as to the payment of dividend over other type of capital.
• It carries the preferential right as to payment of capital in case of winding up or repayment of capital over the over the other type of capital.

SPECIAL POINTS IN AUDIT OF SHARE CAPITAL

In case of share capital issued by the company following points merit consideration of the auditor:
• Authorization of the issue – Auditor should check the minutes of the meeting of the board of directors to check the authorization of the terms of the terms of the issue of share capital.
• Vouching share applications – Auditor should test check the share application forms and vouches their respective entries in the cashbook.
• Legal requirement – It should be checked that the legal requirements as laid down by the companies act, sebi and other regulatory bodies are met.
• Compilation requirements – Auditor should check that various compilation requirement of various statements with the registrar of companies are met with.
• While doing the audit of share capital auditor should vouch the following carefully
o Memorandum of association
o Articles of association
o Minutes of the directors meetings
o Prospectus
o Share application form
o Letters of allotment
o Letters of refund
o Share registers
o Cashbook
o Ledger accounts.

There is a form for which they pay fee to roc for increase in authorised share capital ... check form no.5

mr sankar kiran, kitabi gyan dene se kya hoga.. practical me kya hoga ye batao... for eg. • Legal requirement – It should be checked that the legal requirements as laid down by the companies act, sebi and other regulatory bodies are met. • Compilation requirements – Auditor should check that various compilation requirement of various statements with the registrar of companies are met with. ab isme legal requirement as per Cos Act, SEBI kya hai yeh toh batao.........& compilation requirement mein kya various requirement hai yeh toh batao.