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If there are Borrowings from Bank appearing in ...

If there are Borrowings from Bank appearing in the books of a trading company, what points should...

If there are Borrowings from Bank appearing in the books of a trading company, what points should be considered by an auditor while verifying the same?

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Chiranjibi Chapagain Mar. 14, 2018

Borrowings from a bank may be either in the form of overdraft limits; or short term or medium term or long term loans.

The audit procedures which an auditor may adopt are outlined below-

  1. First of all, ensure that balance as per books of the client and the bank statement are tallying. In case there is any difference between the two amounts, reconciliation statement prepared by the client should account for reasons of such differences.
  2. Examine whether the said borrowings from the bank have been duly authorized by appropriate authority.
  3. Examine documents to ensure that statutory requirements, if any, with regards to creation and registration charges have been met.
  4. Examine the loan agreement and ensure that the terms therein have been duly complied with.
  5. Ascertain the purpose for which loan has been raised and examine whether end use of the funds have been accordingly made.

If there are Borrowings from Bank appearing in the books of a trading company, what points should be considered by an auditor while verifying the same?

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