Auditing and Assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

As an auditor, how you will vouch/ verify following transactions?
a) Bankruptcy Dividends
b) Royalties received
c) Calls in arrears
Answers:
a) Bankruptcy Dividends
Correspondence with the official receiver or liquidator to find particular of part amounts already collected and the balance outstanding at the beginning of the year. The advice, if any, received from the same authority along with the payment should be referred to.
b) Royalties received
The auditor should see the relevant contract and examine the important provisions relating to the conditions of payment of royalty. The rate of royalty, mode of calculation, due dates, periodical statements received, royalty already received and royalty due but not yet received should also be seen.
c) Calls in arrears
The amounts due from shareholders in respect of calls in arrears should be verified reference to the Share Register. If any calls are due from directors, they should be shown separately in the balance sheet. Often the articles provide that interest be charged on calls in arrears. The adjustment of interest in such a case should be verified.



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