Question

Discuss the following two statements:

1- the corporate charter and the bylaws of a company are legal documents; therefore, they should not be examined by the auditors. If the auditor wants information about these documents, an attorney should be consulted.

2- the most important audit procedure to verify dividends for the year is a comparison of a random sample of cancelled dividends checks with a dividend list that has been prepared by management as of the dividend record date.

Answer 1

1.

Is the corporate charter and the bye laws of a company All legal documents of the company but they can be examined by the auditor and auditor can take information from the documents by consulting those charged with governance.

auditor has to read all the information in the bye laws of the company then only auditor can proceed with please audit plan and Audit programme understanding the bylaws of the organisations auditor contract his audit procedures and Audit techniques in the course of extracting audit evidences from the organisations

Auditor has independence to go through bye laws of the organisation and also as an independence to communicate with those charged with governance.

Without understanding the balance of the organisation auditor cannot verify all the books of accounts and statutory requirements to be fulfilled by the organisation.

All the rules and regulations are written in bylaws only without verification of that by lasts it cannot verify the rules and regulations which are implementing in the organisation and which are not complied by them.

2.

Important audit procedure to verify the issue of dividend and payment of dividend is verification of dividend list and verification cheques issued and cheques cancelled.

Getting external confirmation from the shareholder who has not received dividend by taking that check and verifying in which no they have received the dividend.

Comparison of social number of cheques returns and total number of shareholders recorded in the register of equity.

Compare total equity of the urbanization and also the amount issued as dividend calculate the EPS of the organisation.

If there is any excess amount reduce our deficit amount release to the payment of dividends enquire for the reasons and collect appropriate evidences.

Select all the above-mentioned evidence and recorded and documented it will help the auditor in future with the auditor is sued for due negligence.

These are all the information required to solve the above given questions.

I hope, all the above given information and explanations are useful and helpful to you.

Thank you.