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Monday, 26 September 2011

How would you verify the following items, 1. Land and building 2. Freehold land and building 3. Leasehold and land building 4. Investment

LAND AND BUILDING VERIFICATION :-
In case of land and building auditor should verify the title deeds. If the auditor is doubtful about it then may refer the matter to the solicitors of the company. If the property is mortgaged then he should take the certificate from the mortgagee to that effect.
To verify the value of land cost price should be considered by the auditor. To know the original cost of the property auditor should verify the deed of transfer. In case of building valuation builders receipts and depreciation should be considered.


VERIFICATION OF FREEHOLD LAND AND BUILDING :-
Auditor should verify the title deeds first of all. He should check that building is in the name of the client. He should vouch the addition made during the year in the building or land. If any land or building is sold during the year auditor should vouch such sales. He should also verify that profit or loss on such sale is recorded correctly. He should also check the depreciation of the property.


VERIFICATION OF LEASEHOLD AND LAND BUILDING :-
Auditor should verify the the leasehold property by verifying the lease terms. Auditor should note down the conditions of lease and check the property physically if possible. He should also verify the amount of debt received against the mortgage property and the duration period. Lease rental should be debited to the revenue account. Auditor must verify the last receipt of the rent payment. In case of lease building repair depreciation etc. Should be debited to revenue account.


INVESTMENT VERIFICATION :-
Shares, bonds, debentures, certificates, allotment letters, scrip and government securities are included in investment.
Auditor should verify the shares and debentures that these are made on the names of the clients. He should examine all the securities with the investment register to know that these are in order. Auditor must pay proper attention on all the allocation between revenue and expenditure if the shares are purchased cum dividend. If the shares are newly issued then auditor should examine the allotment letter and receipts payments. In case of certificates auditor should check that these are made in the name of the client. These are properly signed and sealed.
Auditor should check that the investments have been correctly valued. He should also vouch the interest and dividend on investment.

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