What All Factors An Auditor Need To Consider While Dealing With Acquired And Other Contingent Assets Of A Business Company?
A business organization definitely own certain assets that are acquired on the hire purchase basis. However, it is the duty of the Auditor to recognize such assets and evaluate these on account of the following steps.
- Each and every detailing done on the company book of records in relevant to board meetings and other group discussions should be thoroughly checked.
Further, he should ensure that the problems encountered are solved with a proper resolution and is passed by all the higher officials of the executive board. This is important as the approval involves the purchase of assets on hire purchase books.
- An Auditor should carefully evaluate the hire purchase agreement and must note the essential terms and conditions on which the bond is made.
- Also, check if all the due installments are paid before the deadline and the charges made against the current profits are dealt decently.
- In case if any depreciation amount is charged on the cash value of the asset, it should be noticed by the Auditor and must take a relevant step to see if the business staff is all set to handle this case.
- In addition to this, if any issue like an amount due to the hire vendor must is documented as a current liability on the liability minute book.
- For the case of a new purchase made, check all the concerned bills and the supporting agreements.
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- There exists the option to trade the shares that belong to another business company and all this should be done on favorable terms and conditions.
- This can even be an uncalled share capital.
Generally, such assets are not recorded or listed in the company balance sheet and the Companies Act does not request to disclose the contingent asset dealings in any manner. All the refund is made initially and the goods are sent out later on. If in case, any claim occurs for money from a previous bill endorser on discounted ones, then it might be dishonored.
While considering the case of Live Stock used by a venture, an Auditor should
- Verify all the entries made with the concerned register and should conduct a detailed analysis between the ledger and the financial statement.
- In addition, all the book value in relation to dead animals must be written off.
- Also, see if the management has taken measures to count and record the living assets on a periodic basis.