What Preliminary Works Has An Auditor To Do Before Commencing The Regular Audit Of A Newly Started Limited Company?


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Amen Bukhari answered
Before commencing the audit of newly started company, auditor should pat attention on appointment, system accountancy, list of books, internal check system, list of officers, visiting the work, instruction to client, memorandum of association, articles of association, prospectus, minute book, inspection of contracts, joint auditor, audit programs etc.
First of all auditor should get a copy of resolution passed at the annual general meeting by the shareholders regarding this appointment. Auditor should examine the system of accountancy employed by the client. Auditor should get a list of all the books maintained in office and the keepers of such books and their specimen signature. If an internal check system is followed, auditor should get a written statement to that effect. Auditor should get a list of all officers of the company together with their specimen signature and enquire about their duties and power.

If the business is of a technical nature, auditor would do well to read a book dealing with the technical side of the business or visit the work. Auditor should instruct his client to close the books of accounts, prepare profit and loss account, balance sheet, list of debtors and creditors, keep the legal papers, contracts, list of securities and other documents ready for auditor's inspection. Auditor should examine the prospectus of the company.

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