Know How an Auditor Is Concerned With The Loans Taken By The Business Firms
A major portion of the business assets is stored in the form of goods. However, it is the duty of the auditor to check all the goods on its nature of procurement and give the confirmation whether it still belongs to the borrower only.
- It is also essential to see if the loan granted includes all the transport facilities made for the goods to reach the company and finally to the respective customers.
- Again, if the company use to stack the goods in the storehouse or so, then the auditor must assure the payment of monthly rent has been made by the owner and thus, the goods are insured in all ways.
- Moreover, the auditor can carefully proceed to check the present value of the goods stock by comparing it with the prevailing market value of the same products. Details regarding the quality and quantity of the stock can be taken from the inspector’s report.
- And finally, if the goods seem to be of a perishable kind, then the auditor has to evaluate the turnover of the client’s stock list.
An Auditor should also look for the loans taken with respect to the security of stocks and shares. For this
- He should arrange a discussion on the stocks and share statements and the amount secured in terms of ensuring these items.
- Additionally, an auditor should recognize the instrument of transfer which is to be stamped and executed for completing the transferring procedures.
- All the stocks must be valued properly according to the prevailing market prices and should be disclosed clearly along with the stocks. An auditor needs to take care of this.
- It is also advisable to see if a proper margin is maintained on the loans advanced.
- A charge is made for the proper registering of these stock items and the auditor should note this.
For checking loans made against securing the insurance policies, the auditor should
- Verify if the policy has completed the course of at least two years.
- Confirm whether all the premiums had been remitted till date and the receipt is available for the same.
- Ensure if a copy of the payment assigned has been submitted to the respective insurance company.
- Check if the surrender value is primarily deposited and is certified by the insurance people.
- At last, ensure if the premium payments made by the lender for making the policy effective is transacted to the Loan account of the borrower with the interest included.