Know How An Auditor Consider The Debentures And Other Unclaimed Dividends Of A Business Company
An Auditor should practice examining the Memorandum and Articles of Association to know the provisions regarding the company’s authority to sanction debentures prior to actually verifying it. Further, the Auditor should review the following cases too.
- If in case the debenture is allotted as the mortgage type, then The Auditor has to evaluate the enlisting certificate that is approved by the Registrar.
- Also, he must precisely analyze the terms and conditions on which the debenture is being granted and how it is contained in the Trust agreement. Do ensure if both these comply with each other.
- Moreover, the Auditor should compare the cash received with that recorded in the cash book.
- In addition, the Auditor must check with the periodic payment of interest laid on these debentures and should document the same in his records. If the Auditor finds any misappropriation with the same account dealings, he must get a reasonable answer from the responsible officials of the business company.
- If these debentures have been already cashed during the year, this has to be strictly affirmed with the Minutes book of the Director’s board. Along with this, the leaflets of the checkbooks, the details on the Bank Passbook and even the corresponding cashbook need to be properly evaluated for confirming the same.
- There can be cases when the debentures are geared on the basis of any collateral security keeping. If so, the Auditor should verify if these listings are registered in the balance sheet. He can cross-check this with the returned debenture certificates.
In the case of unclaimed dividends, the Auditor should conduct the verification procedure in the following manner.
- He must validate whether the bank Account from which the dividend fund is paid is clearly settled without creating any future issues. It should be also noticed that another dividend account is opened for the next year to totally avoid the situation of mixing up the dividend payment with the past year or the next years. He should also take care while accessing the record books and see that there are no particular entries made with these accounts after reconciliation has been done.
- It is also the duty entrusted with the Auditor to evaluate whether the dividends announced on shares as well as the calls in the arrears are all agreed by the Director’s Board and appropriate entries have been made accordingly.