Know The Steps An Auditor Take To Analyze The Employee’s Deposits, Reserve Debts And Bills PayableAssociated With the Company
Usually, it is a common practice for the employers who handle the cash or stores in huge business companies or industries to make a secret cash deposit as security against any future deal misappropriation or fraud plays by them. There are situations when the employees approve trustee securities in favor of the employers instead of actually paying the money.
To review such undertakings, the Auditor should
- Verify that such cash securities or similar pledges are always made with separate accounts in the banks.
- Also, make sure these records are detailed on the liability side of the balance sheet.
- Further, an Auditor should cross-check the amount being deposited in the bank by referring to the standard list obtained from the respective client company.
While evaluating the reserves for bad and insecure debts, the Auditor should
- Acquire a written certificate from any responsible officer of the company about the sum granted for bad and doubtful debts.
- It is important to compare the register of debtors with the corresponding balance of ledger accounts to determine the fair possible amount of bad and doubtful debts.
- The appropriateness of such a stock has definitely to be checked for knowing the real agenda or nature of business going in the company. For making this possible, the Auditor should know the sufficient rules practiced by the company in this regard.
In the Bills Payable section, an Auditor should conduct checking in the following ways.
- All the books recorded with the Bills Payable must be compared with the corresponding Bills Payable Account to make sure things are registered in the appropriate manner.
- All the Bills Payable that is already done with the payment scheme must be analyzed with the cash book and the ones that are returned should be verified for its reason for taking back.
- To check with those Bills Payables that have not yet reached the period of maturity should be detailed with the help of Cashbook available from the previous years to know if any cash payment had been already ready in respect of such bills. If in case, the Auditor senses any doubts due regard to this, he can immediately ask the relevant drawers for the validation of the bill.
- Finally, it is also essential to note if any charges are earlier forced with these concerned assets of the bill and must ensure that such facts are clearly stated in the Balance Sheet.