Page 174 - DCOM509_ADVANCED_AUDITING

Unit 9: Audit of Limited Companies

9.12 Review Questions Notes

1. Distinguish between audit of a firm and the audit of a limited company.
2. Discuss the preliminaries before commencement of the audit of a company.

3. State briefly the procedure for checking the share capital of a newly started company in
the first year of its existence.
4. What are the duties of an auditor of a company in regard to:

(i) Issue of shares at a premium?
(ii) Issue of shares at a discount?
5. List the conditions under which a company may reduce its share capital.
6. State the purposes for which share premium can be utilized.
7. What is the procedure of transfer of shares from one person to another person by operation
of law on account of death or insolvency of a shareholder?
8. What is the procedure followed by an auditor to verify whether share capital has been
properly presented in the financial statements or not?
9. What are the steps undertaken for the alteration of share capital?
10. Briefly describe calls in arrears and calls in advance.

Answers: Self Assessment

1. False 2. True

3. True 4. Confirmation
5. Signature 6. Guidelines
7. Shares 8. False
9. False 10. Accordance

11. Redemption 12. Converting
13. Counterfoils 14. True
15. True 16. Articles
17. Documents 18. True

19. True 20. False

9.13 Further Readings

Books David Coderre (2009). Internal Audit: Efficiency through Automation, John Wiley &
Sons.
Emile Woolf, Moira Hindson (2011). Audit and Accountancy Pitfalls: A Casebook for
Practising Accountants, Lawyers and Insurers, John Wiley & Sons.
Iain Gray, Stuart Manson (2007). The Audit Process: Principles, Practice and Cases,
Cengage Learning EMEA.

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