Vigorous analysis are going on to find out the real inner reason for low marks in Audit.
Sample Question :
As an auditor , what will you check for verifying of Loan and Advances ?
General Answer :
We will verify : 1. whether loans are given as per Board's Resolution. 2. whether ROI are not prejudicial to the interest of the company and shareholder. 3. ............
But , the Examiner wants the following points :
1. An auditor is to report u/s 227(1) of the Companies Act 1956 if :
a) loans and advances are not shown as deposits.
b) ROI is not prejudicial to the interest of company or shareholders.
2. Compliance of AS 13 i.e. Accounting for Investment, AS 16 Borrowing Cost (for loans taken), AS 23 Accounting for Investments in associates , AS 18 (if loans given to Related parties).
3. Auditor is to check u/s 295 of the Companies Act 1956 if Loans are given to directors, then whether all the conditions and duly followed and approval taken from CG.
4. It the company is listed company, then whether SEBI Guidlines has been followed for issuing and taking loans .
5. If auditor finds any adverse opinion he has to report as per SA 700........
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