Preliminary expenses are those expenses which are incurred in business before incorporation and commencement of business, like statutory fees ,company logo, survey report, project report etc are called preliminary expenses

The following should be checked while auditing for preliminary expenses-

• Check Board’s minutes book containing the resolution approving the expenses claimed by promoters as having been spent in formation of the company.
• Examine supporting papers and vouchers, contracts, agreements, etc. to support the promoters’ claims. Also check bills and receipts issued by the printer of the memorandum and articles of association, share certificates, etc.
• Check receipt for the registration fee paid for registration of the company.
• Verify rates of stamp required to be affixed on the memorandum and articles of association.
• Examine the compliance of AS 26 with regard to treatment of such preliminary expenses in the books of account.
• Check that no expenses other than those what constitutes preliminary expenses are booked under this head, e.g. underwriting commission and brokerage paid.