Payment of dividends

Auditing and Assurance Revision Questions and Answers

Following steps are to be considered, in general, while verifying payments of dividends:
 Examine special provisions, if any, in the memorandum and Articles of Association regarding payment of dividends.
 See that in declaring dividends, provisions of company’s rules have been complied with.
 Examine the Board’s minute regarding the payments of dividends.
 Verify the Shareholders’ Register and ensure that the names of all shareholders who are entitled to receive dividends have been included.
 Check the computation of dividends with reference to the rate of dividends and number of shares held.
 Ensure that the central bank’s permission has been obtained in case of remittance of dividends to non-resident shareholders.
 See counterfoils of cheques for amounts paid to shareholders.
 Verify the amount paid as dividend by cross-reference to challans showing deposit of income tax deducted at source.

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